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STATE OF OKLAHOMA
2nd Session of the 60th Legislature (2026)
SENATE BILL 1388 By: Nice
AS INTRODUCED
An Act relating to income tax; amending 68 O.S. 2021,
Section 2357, which relates to credits against tax;
limiting tax credit allowed for certain federal tax
credit claimed to certain tax years; updating
statutory language; providing credit for certain
child care expenses; prescribing credit amount;
requiring the prorating of credit; making credit
refundable; providing credit for certain qualifying
children to certain taxpayers; prescribing credit
amount; requiring the inclusion of spousal income for
certain filing status; requiring the prorating of
credit; making credit refundable; providing for
codification; and providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 2357, is
amended to read as follows:
Section 2357. A. The withheld taxes and estimated taxes paid
shall be allowed as credits as provided by law.
B. 1. There shall be allowed as a credit against the tax
imposed by Section 2355 of this title the amount of tax paid another
state by a resident individual, as defined in paragraph 4 of Section
2353 of this title, upon income received as compensation for
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personal services in such other state; provided, such credit shall
not be allowed with respect to any income specified in Section 114
of Title 4 of the United States Code, 4 U.S.C., Section 114, upon
which a state is prohibited from imposing an income tax. The credit
shall not exceed such proportion of the tax payable under Section
2355 of this title as the compensation for personal services subject
to tax in the other state and also taxable under Section 2355 of
this title bears to the Oklahoma adjusted gross income as defined in
paragraph 13 of Section 2353 of this title.
2. For tax years beginning after December 31, 2007 2008 through
2026, there shall be allowed to a resident individual or part-year
resident individual or nonresident individual member of the Armed
Forces of the United States as a credit against the tax imposed by
Section 2355 of this title twenty percent (20%) of the credit for
child care expenses allowed under the Internal Revenue Code of the
United States 1986, as amended, or five percent (5%) of the child
tax credit allowed under the Internal Revenue Code of 1986, as
amended, whichever amount is greater. Neither credit authorized by
this paragraph shall exceed the tax imposed by Section 2355 of this
title. The maximum child care credit allowable on the Oklahoma
income tax return shall be prorated on the ratio that Oklahoma
adjusted gross income bears to the federal adjusted gross income.
The credit authorized by this paragraph shall not be claimed by any
taxpayer if the federal adjusted gross income reflected on the
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Oklahoma return for the taxpayer is in excess of One Hundred
Thousand Dollars ($100,000.00).
3. For tax year 2027 and subsequent tax years, there shall be
allowed to a resident individual or part-year resident individual or
nonresident individual member of the Armed Forces of the United
States as a credit against the tax imposed by Section 2355 of this
title twenty percent (20%) of the credit for child care expenses
allowed under 26 U.S.C., Section 21. The maximum child care credit
allowable on the Oklahoma income tax return shall be prorated on the
ratio that Oklahoma adjusted gross income bears to the federal
adjusted gross income. If the credit allowed pursuant to this
paragraph exceeds the tax imposed by Section 2355 of this title, the
excess amount shall be refunded to the taxpayer.
SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 2357.410 of Title 68, unless
there is created a duplication in numbering, reads as follows:
A. For tax year 2027 and subsequent tax years, there shall be
allowed against the tax imposed by Section 2355 of Title 68 of the
Oklahoma Statutes, a credit for a resident individual or part-year
resident individual or nonresident individual member of the Armed
Forces of the United States who has a qualifying child as described
under 26 U.S.C., Section 152(c) who has not attained the age of
nineteen (19) years during the tax year.
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B. The credit allowed shall be equal to Five Hundred Dollars
($500.00) per child for individual taxpayers with an adjusted gross
income of Seventy Thousand Dollars ($70,000.00) or less. For every
additional Ten Dollars ($10.00) of adjusted gross income above
Seventy Thousand Dollars ($70,000.00), the credit shall be reduced
by fifteen cents ($0.15). Taxpayers with an adjusted gross income
above One Hundred Thousand Dollars ($100,000.00) shall not be
eligible for the credit authorized by this section.
C. For taxpayers filing married filing separately, the adjusted
gross income of the taxpayer and the taxpayer’s spouse shall be
included for the purposes of the income thresholds and the
calculation of the credit amount, as provided in subsection B of
this section.
D. The maximum credit allowable, as provided in subsection B of
this section, shall be prorated on the ratio that Oklahoma adjusted
gross income bears to the federal adjusted gross income of the
taxpayer.
E. If the credit exceeds the tax imposed by Section 2355 of
Title 68 of the Oklahoma Statutes, the excess amount shall be
refunded to the taxpayer.
SECTION 3. This act shall become effective November 1, 2026.
60-2-2659 QD 12/30/2025 10:06:22 PM