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STATE OF OKLAHOMA
2nd Session of the 60th Legislature (2026)
SENATE BILL 1848 By: Sacchieri
AS INTRODUCED
An Act relating to incentives; amending 62 O.S. 2021,
Sections 860, as amended by Section 1, Chapter 145,
O.S.L. 2023, and 861 (62 O.S. Supp. 2025, Section
860), which relate to the Local Development Act;
prohibiting certain establishments from receiving
incentives or exemptions; prohibiting certain
districts from including the property of certain
establishments; amending 68 O.S. 2021, Section 2902,
as last amended by Section 1, Chapter 411, O.S.L.
2025 (68 O.S. Supp. 2025, Section 2902), which
relates to the exemption from ad valorem tax for
manufacturing facilities; limiting authorization for
exemption for certain facilities to certain period;
updating statutory language; updating statutory
references; and providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 62 O.S. 2021, Section 860, as
amended by Section 1, Chapter 145, O.S.L. 2023 (62 O.S. Supp. 2025,
Section 860), is amended to read as follows:
Section 860. A. A project plan may contain a provision that
certain local taxes may be subject to incentives or may be exempted
in reinvestment areas, historic preservation areas, or enterprise
areas.
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B. The governing body may grant incentives or exemptions from
local taxation only on the new investment made. No ad valorem tax
incentives or exemptions may be granted on the value of property
which has been assessed or which is subject to assessment prior to
the adoption of the project plan. No ad valorem tax incentives or
exemptions authorized in this section may be granted for retail
establishments or an establishment, the business of which is
described by National Industry Numbers 518210 and 221114 through
221117 of the North American Industry Classification System (NAICS)
Manual, latest revision. If a retail establishment or an
establishment, the business of which is described by National
Industry Numbers 518210 and 221114 through 221117 of the NAICS
Manual, latest revision, is located in property which otherwise
qualifies for an incentive or exemption pursuant to this section,
the incentive or exemption shall not be allowed for that portion of
the property used for such retail establishment or an establishment,
the business of which is described by National Industry Numbers
518210 and 221114 and 221115 of the NAICS Manual, latest revision.
As used in this subsection, “retail establishment” shall not include
an establishment that provides lodging including, but not limited
to, a hotel, apartment hotel, public rooming house, or motel. No ad
valorem tax incentives or exemptions authorized in this section may
be granted if the property is located in an increment district or as
long as the property is subject to the ad valorem tax exemption for
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new or expanding manufacturing facilities as authorized by Section
6B of Article X of the Oklahoma Constitution. In the event of
disposition by lease or sublease to a lessee not entitled to an ad
valorem tax exemption, the improvements placed thereon shall not be
entitled to an ad valorem tax exemption provided for in Section 850
et seq. of this title. Except as otherwise provided by this
subsection, the incentives, or exemptions, which may be full or
partial, may be granted for a period not to exceed five (5) years.
With respect to an establishment, the business of which is described
by U.S. Industry Number 518210 of the North American Industry
Classification System (NAICS) Manual, 2017 revision, such incentives
or exemptions may be granted for a period not to exceed twenty-five
(25) years.
C. No incentives or exemptions may be granted to any business
or firm that is relocating from within the state and is subject to
or in the process of recruitment by two or more governmental
entities within the state unless the governmental entity in which
the business or firm does not locate adopts a resolution giving
their its approval to the granting of incentives or exemptions to
the business or firm locating in the competing governmental entity.
No incentives or exemptions may be granted to an out-of-state
business or firm that is subject to or in the process of recruitment
by two or more governmental entities within the state except as
otherwise provided for in this subsection. The prohibition against
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incentives or exemptions to a business or firm relocating within the
state may be waived upon application by the governing body to, and
approval of, the Director Chief Executive Officer of the Oklahoma
Department of Commerce. In order for the Director Chief Executive
Officer to approve the waiver, the Director Chief Executive Officer
must find that the incentives or exemptions are necessary and
sufficient to attract the business or firm and that the benefits
generated by the business location outweigh the costs of the
business location.
D. A project plan may contain a provision that ad valorem taxes
may be exempted in a commercial historic preservation area that is
adjacent to and serves designated historical residential areas for
neighborhood commercial preservation purposes in order for the
neighborhood to retain its basic character and scale. No ad valorem
tax exemption may be granted on the value of property which has been
assessed or which is subject to assessment prior to the adoption of
the project plan. No ad valorem tax exemption shall be granted
pursuant to the provisions of this subsection for single-family
residences. The governing body may grant the exemption only on the
increase in value of the property. The exemptions may be granted
for a specific period of time as determined by a written agreement
between the property owners of the area and the governing body and
may be renewed. Uses of the property eligible for this exemption
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may include, but not be limited to, commercial, office, or
multifamily residential use.
E. For increment districts in operation for nine (9) months or
more, on or before the ninetieth day following the end of each
fiscal year, the governing body of a city, town, or county shall
submit a report to the Oklahoma Department of Commerce. The
Department shall provide a copy of the report to any member of the
public upon request. The disclosure report shall include the
following information:
1. The amount and source of revenue captured and apportioned
pursuant to the project plan;
2. The amount and purpose of expenditures;
3. The amount of principal and interest due on outstanding
bonded indebtedness;
4. The tax increment base and current captured appraised value
or the other local tax or fee collections retained by the area;
5. The captured appraised value or the other local tax or fee
collections shared by the city, town, or county and other taxing
entities, the total amount of tax increments received, and any
additional information necessary to demonstrate compliance with the
plan adopted by the city, town, or county;
6. The name of the person who is currently in charge of the
implementation of the plan; and
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7. The names of the persons who have disclosed an interest as
required pursuant to Section 857 of this title and the interest
disclosed.
F. For those incentive districts in operation for nine (9)
months or more, on or before the ninetieth day following the end of
each fiscal year, the governing body of a city, town, or county
shall submit a report to the Oklahoma Department of Commerce. The
Department shall provide a copy of the report to any member of the
public upon request. The disclosure report shall include the
following information:
1. The parties receiving incentives or exemptions;
2. A general description of the property and the improvements
to be made;
3. The portion and fair market value of the property to be
exempted or that portion of the local taxes to be subject to
incentives or to be exempted;
4. The duration of the incentives or exemptions;
5. Any additional information necessary to demonstrate
compliance with the tax incentives or exemptions;
6. The name of the person who is currently in charge of the
implementation of the plan; and
7. The names of the persons who have disclosed an interest as
required pursuant to Section 857 of this title and the interest
disclosed.
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SECTION 2. AMENDATORY 62 O.S. 2021, Section 861, is
amended to read as follows:
Section 861. A. A project plan may contain a provision that
the increments from certain local taxes or fees may be used to
finance project costs in areas qualified under the Local Development
Act. The increment from local taxes or fees levied from and after
the effective date of the approval of such plan shall be apportioned
in the following manner for a period not to exceed twenty-five (25)
fiscal years thereafter or the period required for payment of
project costs, whichever is less; provided, however, that for any
increment district established after November 1, 1992, such time
period shall be tolled for a period of time equal to the pendency of
any litigation directly or indirectly challenging the increment
district or apportionment or disbursement:
1. That portion of the ad valorem taxes which are produced by
the levy at the rate fixed each year by or for each such ad valorem
taxing entity upon the base assessed value of the increment district
determined pursuant to Section 862 of this title and as to an area
later added to the increment district, the effective date of the
addition to the increment district, shall be paid to each taxing
entity and all or any portion of local sales taxes, other local
taxes or local fees collected each year which are not subject to
apportionment shall be paid or retained as otherwise provided by
law; and
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2. All or any portion of:
a. ad valorem taxes, in excess of such amount specified
in paragraph 1 of this subsection,
b. the increment of local sales taxes, other local taxes
or local fees, or a combination thereof, paid to or
for the benefit of the city, town, or county approving
the plan, and
c. with its consent, evidenced by agreement in writing,
the increment of local sales tax, other local taxes or
local fees, or combination thereof, payable to any
other local public taxing entity,
shall be apportioned to, and when collected, shall be paid into an
apportionment fund established for the project pursuant to the
project plan. Such revenues shall be used for the payment of the
project costs and for the payment of the principal of, the interest
on, and any premiums due in connection with the bonds of, loans,
notes, or advances of money to, or indebtedness incurred to finance
project costs, whether funded, refunded, assumed, or otherwise, for
financing, in whole or in part, eligible project costs. For the
purposes of this section, “local sales tax” means amounts payable to
or for the benefit of a local governmental entity calculated as a
percentage of gross sales whether imposed by ordinance, resolution,
covenant, or agreement. Nothing shall prohibit the increments from
being used to directly pay eligible project costs. When all
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eligible project costs and such bonds, loans, advances of money or
indebtedness, if any, including interest thereon and any premiums
due in connection with them, have been paid and the governing body
adopts an ordinance or resolution dissolving the tax apportionment
financing, all ad valorem taxes upon the taxable property within the
boundary of such district shall be paid into the funds of the
respective taxing entities.
B. If a project plan contains a provision for apportionment as
provided in subsection A of this section, and notwithstanding any
other provision of law to the contrary, the governing body shall
direct in the resolution or ordinance approving the plan which
portion of the increments, including whether any or all, to be paid
into the apportionment fund shall constitute a part of the general
fund to be appropriated annually by the governing body, and which
portion, including whether any or all, shall constitute funds of a
public entity authorized to issue tax apportionment bonds or notes
or to incur project costs.
C. To the extent that collections exceed project costs and the
provisions for payment of principal and interest along with
sufficient reserves on any bonds issued pursuant to the provisions
of Section 863 of this title, the excess shall be paid into the
funds of the respective taxing entities unless the taxing entity
agrees to some other use of such collections.
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D. Except as provided in subsection E of this section, for any
year in which taxes or fees are apportioned in the manner specified
in paragraph 2 of subsection A of this section, any increase in
assessed valuation of taxable real property or taxable personal
property within the boundaries of such district in excess of the
base assessed value shall not be considered by any taxing entity in
computing any debt limitation or for any other purpose except for
the levy of taxes and in determining the amount to be apportioned.
E. In the event there is a change in the assessment ratio for
ad valorem tax property valuations of property within the boundaries
of an increment district, the portions of valuations for assessment
pursuant to paragraphs 1 and 2 of subsection A of this section shall
be proportionately adjusted in accordance with such reassessment.
F. Nothing in this section shall be construed as relieving
property in such project area from being assessed as provided in the
Ad Valorem Tax Code of the Oklahoma Statutes, or as relieving owners
of such property from paying a uniform rate of taxes, as required by
Section 5 of Article X of the Oklahoma Constitution.
G. Subject to constitutional exemptions, if property in an
increment district is owned by a public entity and is leased to or
operated for a private use, including, without limitation, use by a
not-for-profit corporation or trust, the portion of the property so
leased or operated shall be assessed by the county assessor as if
such portion of the property were taxable, and, during the term of
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the increment district, the public entity owning such property shall
pay or require the user thereof to pay ad valorem taxes or an in
lieu ad valorem tax payment in an amount not less than the amount
that would have resulted if taxes had otherwise been levied on such
portion of the property. If property subject to ad valorem tax in
an increment district is acquired by a private not-for-profit
corporation or public or private trust, it shall continue to be
assessed and subject to ad valorem taxes or an in lieu ad valorem
payment by the user thereof until termination of the increment
district unless and only to the extent of the portion of the
property and the use thereof that is:
1. Acquired to implement the project plan;
2. Converted to a new tax-exempt use by a tax-exempt user; or
3. Entitled to claim a constitutional exemption notwithstanding
statutory provisions.
During the period of an increment district, such nonexempt uses and
interests are severable for purposes of ad valorem and in lieu of ad
valorem assessment and payments, notwithstanding any statutory
provisions to the contrary.
H. Increment districts authorized pursuant to this section
shall not include the property of an establishment, the business of
which is described by National Industry Numbers 518210 and 221114
through 221117 of the North American Industry Classification System
(NAICS) Manual, latest revision.
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SECTION 3. AMENDATORY 68 O.S. 2021, Section 2902, as
last amended by Section 1, Chapter 411, O.S.L. 2025 (68 O.S. Supp.
2025, Section 2902), is amended to read as follows:
Section 2902. A. Except as otherwise provided by subsection H
of Section 3658 of this title pursuant to which the exemption
authorized by this section may not be claimed, a qualifying
manufacturing concern, as defined by Section 6B of Article X of the
Oklahoma Constitution, and as further defined herein, shall be
exempt from the levy of any ad valorem taxes upon new, expanded, or
acquired manufacturing facilities including facilities engaged in
research and development, for a period of five (5) years. The
provisions of Section 6B of Article X of the Oklahoma Constitution
requiring an existing facility to have been unoccupied for a period
of twelve (12) months prior to acquisition shall be construed as a
qualification for a facility to initially receive an exemption, and
shall not be deemed to be a qualification for that facility to
continue to receive an exemption in each of the four (4) years
following the initial year for which the exemption was granted.
Such facilities are hereby classified for the purposes of taxation
as provided in Section 22 of Article X of the Oklahoma Constitution.
B. For purposes of this section, the following definitions
shall apply:
1. “Manufacturing facilities” means facilities engaged in the
mechanical or chemical transformation of materials or substances
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into new products and except as provided by paragraph 6 of
subsection C of this section shall include:
a. establishments which have received a manufacturer
exemption permit pursuant to the provisions of Section
1359.2 of this title,
b. facilities including repair and replacement parts,
primarily engaged in aircraft repair, building and
rebuilding whether or not on a factory basis,
c. establishments primarily engaged in computer services
and data processing as defined under Industrial Group
Numbers 5112 and 5415, and U.S. Industry Number
Numbers 334611 and 519130 of the NAICS North American
Industry Classification System (NAICS) Manual, latest
revision, and which derive at least fifty percent
(50%) of their annual gross revenues from the sale of
a product or service to an out-of-state buyer or
consumer, and as defined under Industrial Group Number
5182 of the NAICS Manual, latest revision, which
derive at least eighty percent (80%) of their annual
gross revenues from the sale of a product or service
to an out-of-state buyer or consumer. Eligibility as
a manufacturing facility pursuant to this subparagraph
shall be established, subject to review by the
Oklahoma Tax Commission, by annually filing an
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affidavit with the Tax Commission stating that the
facility so qualifies and such other information as
required by the Tax Commission. For purposes of
determining whether annual gross revenues are derived
from sales to out-of-state buyers, all sales to the
federal government shall be considered to be to an
out-of-state buyer,
d. facilities that the investment cost of the
construction, acquisition or expansion is Five Hundred
Thousand Dollars ($500,000.00) or more with respect to
assets placed into service during calendar year 2022.
For subsequent calendar years, the investment required
shall be increased annually by a percentage equal to
the previous year’s increase in the Consumer Price
Index-All Index for All Urban Consumers (“CPI-U”)
(CPI-U) and such adjusted amount shall be the required
investment cost in order to qualify for the exemption
authorized by this section. The Oklahoma Department
of Commerce shall determine the amount of the
increase, if any, on January 1 of each year. The
Oklahoma Tax Commission shall publish on its website
at least annually the adjusted dollar amount in order
to qualify for the exemption authorized by this
section and shall include the adjusted dollar amount
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in any of its relevant forms or publications with
respect to the exemption. Provided, “investment cost”
shall not include the cost of direct replacement,
refurbishment, repair or maintenance of existing
machinery or equipment, except that investment cost
shall include capital expenditures for direct
replacement, refurbishment, repair or maintenance of
existing machinery or equipment that qualifies for
depreciation and/or amortization pursuant to the
Internal Revenue Code of 1986, as amended, and such
expenditures shall be eligible as a part of an
expansion that otherwise qualifies under this section,
e. establishments primarily engaged in distribution as
defined under Industry Numbers 49311, 49312, 49313 and
49319 and Industry Sector Number 42 of the NAICS
Manual, latest revision, and which meet the following
qualifications:
(1) construction with an initial capital investment
of at least Five Million Dollars ($5,000,000.00),
(2) employment of at least one hundred (100) full-
time-equivalent employees, as certified by the
Oklahoma Employment Security Commission,
(3) payment of wages or salaries to its employees at
a wage which equals or exceeds the average wage
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requirements in the Oklahoma Quality Jobs Program
Act for the year in which the real property was
placed into service, and
(4) commencement of construction on or after November
1, 2007, with construction to be completed within
three (3) years from the date of the commencement
of construction,
f. facilities engaged in the manufacturing, compounding,
processing or fabrication of materials into articles
of tangible personal property according to the special
order of a customer (custom order manufacturing) by
manufacturers classified as operating in North
American Industry Classification System (NAICS) NAICS
Sectors 32 and 33, but does not include such custom
order manufacturing by manufacturers classified in
other NAICS code sectors, and
g. with respect to any entity making an application for
the exemption authorized by this section on or after
January 1, 2023, the establishment making application
for exempt treatment of real or personal property
acquired or improved beginning January 1, 2022, and
for any calendar year thereafter, the entity shall be
required to pay new direct jobs, as defined by Section
3603 of this title for purposes of the Oklahoma
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Quality Jobs Program Act, an average annualized wage
which equals or exceeds the average wage requirement
in the Oklahoma Quality Jobs Program Act for the year
in which the real or personal property was placed into
service. The Oklahoma Tax Commission may request
verification from the Oklahoma Department of Commerce
that an establishment seeking an exemption for real or
personal property pays an average annualized wage that
equals or exceeds the average wage requirement in
effect for the year in which the real or personal
property was placed into service. For purposes of
this subparagraph, it shall not be necessary for the
establishment to qualify for incentive payments
pursuant to the Oklahoma Quality Jobs Program Act, but
the establishment shall be subject to the wage
requirements of the Oklahoma Quality Jobs Program Act
with respect to new direct jobs in order to qualify
for the exempt treatment authorized by this section.
Eligibility as a manufacturing facility pursuant to this
subparagraph shall be established, subject to review by the Tax
Commission, by annually filing an affidavit with the Tax Commission
stating that the facility so qualifies and containing such other
information as required by the Tax Commission.
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Provided, eating and drinking places, as well as other retail
establishments, shall not qualify as manufacturing facilities for
purposes of this section, nor shall centrally assessed properties.
Eligibility as a manufacturing facility pursuant to this
subparagraph shall be established, subject to review by the Tax
Commission, by annually filing an application with the Tax
Commission stating that the facility so qualifies and containing
such other information as required by the Tax Commission;
2. “Facility” and “facilities”, except as otherwise provided by
this section, means and includes the land, buildings, structures and
improvements used directly and exclusively in the manufacturing
process. Effective January 1, 2022, and for each calendar year
thereafter, for establishments which have received a manufacturer
exemption permit pursuant to the provisions of Section 1359.2 of
this title, or facilities engaged in manufacturing activities
defined or classified in the NAICS Manual under National Industry
Nos. Numbers 311111 through 339999, inclusive, but for no other
establishments, facility and facilities means and includes the land,
buildings, structures, improvements, machinery, fixtures, equipment
and other personal property used directly and exclusively in the
manufacturing process; and
3. “Research and development” means activities directly related
to and conducted for the purpose of discovering, enhancing,
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increasing or improving future or existing products or processes or
productivity.
C. The following provisions shall apply:
1. A manufacturing concern shall be entitled to the exemption
herein provided for each new manufacturing facility constructed,
each existing manufacturing facility acquired and the expansion of
existing manufacturing facilities on the same site, as such terms
are defined by Section 6B of Article X of the Oklahoma Constitution
and by this section;
2. No manufacturing concern shall receive more than one five-
year exemption for any one manufacturing facility unless the
expansion which qualifies the manufacturing facility for an
additional five-year exemption meets the requirements of paragraph 4
of this subsection and the employment level established for any
previous exemption is maintained;
3. Any exemption as to the expansion of an existing
manufacturing facility shall be limited to the increase in ad
valorem taxes directly attributable to the expansion;
4. All initial applications for any exemption for a new,
acquired or expanded manufacturing facility shall be granted only
if:
a. there is a net increase in annualized base payroll
over the initial payroll of at least Two Hundred Fifty
Thousand Dollars ($250,000.00) if the facility is
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located in a county with a population of fewer than
seventy-five thousand (75,000), according to the most
recent Federal Decennial Census, while maintaining or
increasing base payroll in subsequent years, or at
least One Million Dollars ($1,000,000.00) if the
facility is located in a county with a population of
seventy-five thousand (75,000) or more, according to
the most recent Federal Decennial Census, while
maintaining or increasing base payroll in subsequent
years; provided, the payroll requirement of this
subparagraph shall be waived for claims for exemptions
including claims previously denied or on appeal on
March 3, 2010, for all initial applications for
exemption filed on or after January 1, 2004, and on or
before March 31, 2009, and all subsequent annual
exemption applications filed related to the initial
application for exemption, for an applicant, if the
facility has been located in Oklahoma for at least
fifteen (15) years engaged in marine engine
manufacturing as defined under U.S. Industry Number
333618 of the NAICS Manual, latest revision, and has
maintained an average employment of five hundred (500)
or more full-time-equivalent employees over a ten-year
period. Any applicant that qualifies for the payroll
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requirement waiver as outlined in the previous
sentence and subsequently closes its Oklahoma
manufacturing plant prior to January 1, 2012, may be
disqualified for exemption and subject to recapture.
For an applicant engaged in paperboard manufacturing
as defined under U.S. Industry Number 322130 of the
NAICS Manual, latest revision, union master payouts
paid by the buyer of the facility to specified
individuals employed by the facility at the time of
purchase, as specified under the purchase agreement,
shall be excluded from payroll for purposes of this
section.
In order to provide certainty with respect to
investments in manufacturing facilities pertaining to
all initial applications for exemption filed on or
after January 1, 2016, the following definitions shall
apply:
(1) “base payroll” shall mean total payroll adjusted
for any nonrecurring bonuses, exercise of stock
option or stock rights and other nonrecurring,
extraordinary items included in total payroll,
and
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(2) “initial payroll” shall mean base payroll for the
year immediately preceding the initial
construction, acquisition or expansion.
The Tax Commission shall verify payroll
information through the Oklahoma Employment
Security Commission by using reports from the
Oklahoma Employment Security Commission for the
calendar year immediately preceding the year for
which initial application is made for base-line
baseline payroll, which must be maintained or
increased for each subsequent year; provided, a
manufacturing facility shall have the option of
excluding from its payroll, for purposes of this
section:
i. payments to sole proprietors, members
of a partnership, members of a limited
liability company who own at least ten
percent (10%) of the capital of the
limited liability company or
stockholder-employees of a corporation
who own at least ten percent (10%) of
the stock in the corporation, and
ii. any nonrecurring bonuses, exercise of
stock option or stock rights or other
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nonrecurring, extraordinary items
included in total payroll numbers as
reported by the Oklahoma Employment
Security Commission. A manufacturing
facility electing either option shall
indicate such election upon its
application for an exemption under this
section. Any manufacturing facility
electing either option shall submit
such information as the Tax Commission
may require in order to verify payroll
information. Payroll information
submitted pursuant to the provisions of
this paragraph shall be submitted to
the Tax Commission and shall be subject
to the provisions of Section 205 of
this title, and
b. the facility offers, or will offer within one hundred
eighty (180) days of the date of employment, a basic
health benefits plan to the full-time-equivalent
employees of the facility, which is determined by the
Oklahoma Department of Commerce to consist of the
elements specified in subparagraph b of paragraph 1 of
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subsection A of Section 3603 of this title or elements
substantially equivalent thereto.
For purposes of this section, calculation of the amount of
increased base payroll shall be measured from the start of initial
construction or expansion to the completion of such construction or
expansion or for three (3) years from the start of initial
construction or expansion, whichever occurs first. The amount of
increased base payroll shall include payroll for full-time-
equivalent employees in this state who are employed by an entity
other than the facility which has previously or is currently
qualified to receive an exemption pursuant to the provisions of this
section and who are leased or otherwise provided to the facility, if
such employment did not exist in this state prior to the start of
initial construction or expansion of the facility. The
manufacturing concern shall submit an affidavit to the Tax
Commission, signed by an officer, stating that the construction,
acquisition or expansion of the facility will result in a net
increase in the annualized base payroll as required by this
paragraph and that full-time-equivalent employees of the facility
are or will be offered a basic health benefits plan as required by
this paragraph. If, after the completion of such construction or
expansion or after three (3) years from the start of initial
construction or expansion, whichever occurs first, the construction,
acquisition or expansion has not resulted in a net increase in the
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amount of annualized base payroll, if required, or any other
qualification specified in this paragraph has not been met, the
manufacturing concern shall pay an amount equal to the amount of any
exemption granted including penalties and interest thereon, to the
Tax Commission for deposit to the Ad Valorem Reimbursement Fund;
5. Except as otherwise provided by this paragraph, any new,
acquired or expanded computer data processing, data preparation or
information processing services provider classified in U.S. Industry
Number 518210 of the North American Industrial Classification System
(NAICS) NAICS Manual, 2017 revision, may apply for exemptions under
this section for each year in which new, acquired, or expanded
capital improvements to the facility are made for assets placed in
service not later than December 31, 2021, if:
a. there is a net increase in annualized payroll of the
applicant at any facility or facilities of the
applicant in this state of at least Two Hundred Fifty
Thousand Dollars ($250,000.00), which is attributable
to the capital improvements, or a net increase of
Seven Million Dollars ($7,000,000.00) or more in
capital improvements, while maintaining or increasing
payroll at the facility or facilities in this state
which are included in the application, and
b. the facility offers, or will offer within one hundred
eighty (180) days of the date of employment of new
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employees attributable to the capital improvements, a
basic health benefits plan to the full-time-equivalent
employees of the facility, which is determined by the
Oklahoma Department of Commerce to consist of the
elements specified in subparagraph b of paragraph 1 of
subsection A of Section 3603 of this title or elements
substantially equivalent thereto.
An establishment described by this paragraph, the primary
business activity of which is described by National Industry No.
Number 518210 of the North American Industry Classification System
(NAICS) NAICS Manual, 2017 revision, that has applied for and been
granted an exemption for personal property at any time within five
(5) years prior to November 1, 2021, may apply for exemptions for
items of eligible personal property to be located within
improvements to real property and such real property and
improvements having been exempt from ad valorem taxation prior to
November 1, 2021, pursuant to the provisions of this section if such
personal property is placed in service not later than December 31,
2036 2026. No additional personal property of such establishment
placed in service after such date shall qualify for the exempt
treatment otherwise authorized pursuant to this paragraph;
6. Effective January 1, 2017, an entity engaged in electric
power generation by means of wind, as described by the North
American Industry Classification System, No. 221119, shall not be
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defined as a qualifying manufacturing concern for purposes of the
exemption otherwise authorized pursuant to Section 6B of Article X
of the Oklahoma Constitution or qualify as a manufacturing facility
as defined in this section. No initial application for exemption
shall be filed by or accepted from an entity engaged in electric
power generation by means of wind on or after January 1, 2018;
7. An entity or applicant engaged in an industry as defined
under U.S. Industry Number 324110 of the NAICS Manual, latest
revision, which has applied for or been granted an exemption for a
time period which began on or after calendar year 2012 and before
calendar year 2016 but which did not meet the payroll requirements
of subparagraph a of paragraph 4 of this subsection because of
nonrecurring bonuses, exercise of stock option or stock rights or
other nonrecurring, extraordinary items included in total payroll in
the previous year, shall be allowed an exemption, beginning with
calendar year 2016, for the number of years including the calendar
year for which the exemption was denied, remaining in the entity’s
five-year exemption period, provided such entity attains or
increases payroll at or above the initial or base payroll
established for the exemption;
8. A facility engaged in manufacturing defined under U.S.
Industry Number 327310 of the NAICS Manual shall have the payroll
requirements of paragraph 4 of this subsection waived for tax year
2021, which is based in part on the 2020 calendar year payroll
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reported to the Oklahoma Employment Security Commission, and may
continue to receive the exemption for the five-year period provided
in this section only if all other requirements of this section are
met; and
9. A facility engaged in manufacturing which otherwise
qualifies for the exemption or exemptions pursuant to the provisions
of this section shall have the payroll requirements of paragraph 4
of this subsection waived for tax year 2021, which is based in part
on the 2020 calendar year payroll reported to the Oklahoma
Employment Security Commission, and for tax year 2022, which is
based in part on the 2021 calendar year payroll reported to the
Oklahoma Employment Security Commission, and may continue to receive
the exemption for the five-year period provided in this section only
if all other requirements of this section are met. Provided, a
facility engaged in manufacturing as defined under Industrial Group
Number 3364 of the NAICS Manual, latest revision, which otherwise
qualifies or qualified to receive the exemption for the five-year
period provided in this section, including claims previously denied,
shall have the payroll requirements of paragraph 4 of this
subsection waived for the five-year exemption period of those
initial exemption applications filed after January 1, 2020, and
before March 16, 2021; and
10. Establishments primarily engaged in computer services and
data processing as defined under Industrial Group Number 5415 of the
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North American Industry Classification System (NAICS) Manual, latest
revision, may apply for exemptions under this section for each year
in which new, acquired, or expanded capital improvements to the
facility are made for assets placed in service not later than
December 31, 2026.
D. 1. Except as provided in paragraph 2 of this subsection,
the five-year period of exemption from ad valorem taxes for any
qualifying manufacturing facility property shall begin on January 1
following the initial qualifying use of the property in the
manufacturing process.
2. The five-year period of exemption from ad valorem taxes for
any qualifying manufacturing facility, as specified in subparagraphs
a and b of this paragraph, which is located within a tax incentive
district created pursuant to the Local Development Act by a county
having a population of at least five hundred thousand (500,000),
according to the most recent Federal Decennial Census, shall begin
on January 1 following the expiration or termination of the ad
valorem exemption, abatement, or other incentive provided through
the tax incentive district. Facilities qualifying pursuant to this
subsection shall include:
a. a manufacturing facility as defined in subparagraph c
of paragraph 1 of subsection B of this section, and
b. an establishment primarily engaged in distribution as
defined under Industry Number 49311 of the North
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American Industry Classification System for which the
initial capital investment was at least One Hundred
Eighty Million Dollars ($180,000,000.00); provided,
that the qualifying job creation and depreciable
property investment occurred prior to calendar year
2017 but not earlier than calendar year 2013.
E. Any person, firm or corporation claiming the exemption
herein provided for shall file each year for which exemption is
claimed, an application therefor with the county assessor of the
county in which the new, expanded or acquired facility is located.
The application shall be on a form or forms prescribed by the Tax
Commission, and shall be filed on or before March 15, except as
provided in Section 2902.1 of this title, of each year in which the
facility desires to take the exemption or within thirty (30) days
from and after receipt by such person, firm or corporation of notice
of valuation increase, whichever is later. In a case where
completion of the facility or facilities will occur after January 1
of a given year, a facility may apply to claim the ad valorem tax
exemption for that year. If such facility is found to be qualified
for exemption, the ad valorem tax exemption provided for herein
shall be granted for that entire year and shall apply to the ad
valorem valuation as of January 1 of that given year. For
applicants who qualify under the provisions of subparagraph b of
paragraph 1 of subsection B of this section, the application shall
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include a copy of the affidavit and any other information required
to be filed with the Tax Commission.
F. The application shall be examined by the county assessor and
approved or rejected in the same manner as provided by law for
approval or rejection of claims for homestead exemptions. The
taxpayer shall have the same right of review by and appeal from the
county board of equalization, in the same manner and subject to the
same requirements as provided by law for review and appeals
concerning homestead exemption claims. Approved applications shall
be filed by the county assessor with the Tax Commission no later
than June 15, except as provided in Section 2902.1 of this title, of
the year in which the facility desires to take the exemption.
Incomplete applications and applications filed after June 15 will be
declared null and void by the Tax Commission. In the event that a
taxpayer qualified to receive an exemption pursuant to the
provisions of this section shall make payment of ad valorem taxes in
excess of the amount due, the county treasurer shall have the
authority to credit the taxpayer’s real or personal property tax
overpayment against current taxes due. The county treasurer may
establish a schedule of up to five (5) years of credit to resolve
the overpayment.
G. Nothing herein shall in any manner affect, alter or impair
any law relating to the assessment of property, and all property,
real or personal, which may be entitled to exemption hereunder shall
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be valued and assessed as is other like property and as provided by
law. The valuation and assessment of property for which an
exemption is granted hereunder shall be performed by the Tax
Commission using one or more of the cost, income and expense and
sales comparison approaches to estimate fair cash value in
accordance with the Uniform Standards of Professional Appraisal
Practice.
H. The Tax Commission shall have the authority and duty to
prescribe forms and to promulgate rules as may be necessary to carry
out and administer the terms and provisions of this section.
SECTION 4. This act shall become effective November 1, 2026.
60-2-2891 QD 1/14/2026 11:58:35 PM