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STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
SENATE BILL 295 By: Burns
AS INTRODUCED
An Act relating to tax; amending 68 O.S. 2021,
Section 2355, as last amended by Section 1, Chapter
27, 1st Extraordinary Session, O.S.L. 2023 (68 O.S.
Supp. 2024, Section 2355), which relates to income
tax; modifying certain income tax rates for certain
tax years; modifying certain withholding requirement
for certain tax years; amending 68 O.S. 2021, Section
2370, which relates to the banking privilege tax;
limiting tax to certain tax years; updating statutory
references; updating statutory language; and
providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 2355, as
last amended by Section 1, Chapter 27, 1st Extraordinary Session,
O.S.L. 2023 (68 O.S. Supp. 2024, Section 2355), is amended to read
as follows:
Section 2355. A. Individuals. For all taxable years beginning
after December 31, 1998, and before January 1, 2006, a tax is hereby
imposed upon the Oklahoma taxable income of every resident or
nonresident individual, which tax shall be computed at the option of
the taxpayer under one of the two following methods:
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1. METHOD 1.
a. Single individuals and married individuals filing
separately not deducting federal income tax:
(1) 1/2% tax on first $1,000.00 or part thereof,
(2) 1% tax on next $1,500.00 or part thereof,
(3) 2% tax on next $1,250.00 or part thereof,
(4) 3% tax on next $1,150.00 or part thereof,
(5) 4% tax on next $1,300.00 or part thereof,
(6) 5% tax on next $1,500.00 or part thereof,
(7) 6% tax on next $2,300.00 or part thereof, and
(8) (a) for taxable years beginning after December
31, 1998, and before January 1, 2002, 6.75%
tax on the remainder,
(b) for taxable years beginning on or after
January 1, 2002, and before January 1, 2004,
7% tax on the remainder, and
(c) for taxable years beginning on or after
January 1, 2004, 6.65% tax on the remainder.
b. Married individuals filing jointly and surviving
spouse to the extent and in the manner that a
surviving spouse is permitted to file a joint return
under the provisions of the Internal Revenue Code of
1986, as amended, and heads of households as defined
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in the Internal Revenue Code of 1986, as amended, not
deducting federal income tax:
(1) 1/2% tax on first $2,000.00 or part thereof,
(2) 1% tax on next $3,000.00 or part thereof,
(3) 2% tax on next $2,500.00 or part thereof,
(4) 3% tax on next $2,300.00 or part thereof,
(5) 4% tax on next $2,400.00 or part thereof,
(6) 5% tax on next $2,800.00 or part thereof,
(7) 6% tax on next $6,000.00 or part thereof, and
(8) (a) for taxable years beginning after December
31, 1998, and before January 1, 2002, 6.75%
tax on the remainder,
(b) for taxable years beginning on or after
January 1, 2002, and before January 1, 2004,
7% tax on the remainder, and
(c) for taxable years beginning on or after
January 1, 2004, 6.65% tax on the remainder.
2. METHOD 2.
a. Single individuals and married individuals filing
separately deducting federal income tax:
(1) 1/2% tax on first $1,000.00 or part thereof,
(2) 1% tax on next $1,500.00 or part thereof,
(3) 2% tax on next $1,250.00 or part thereof,
(4) 3% tax on next $1,150.00 or part thereof,
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(5) 4% tax on next $1,200.00 or part thereof,
(6) 5% tax on next $1,400.00 or part thereof,
(7) 6% tax on next $1,500.00 or part thereof,
(8) 7% tax on next $1,500.00 or part thereof,
(9) 8% tax on next $2,000.00 or part thereof,
(10) 9% tax on next $3,500.00 or part thereof, and
(11) 10% tax on the remainder.
b. Married individuals filing jointly and surviving
spouse to the extent and in the manner that a
surviving spouse is permitted to file a joint return
under the provisions of the Internal Revenue Code of
1986, as amended, and heads of households as defined
in the Internal Revenue Code of 1986, as amended,
deducting federal income tax:
(1) 1/2% tax on the first $2,000.00 or part thereof,
(2) 1% tax on the next $3,000.00 or part thereof,
(3) 2% tax on the next $2,500.00 or part thereof,
(4) 3% tax on the next $1,400.00 or part thereof,
(5) 4% tax on the next $1,500.00 or part thereof,
(6) 5% tax on the next $1,600.00 or part thereof,
(7) 6% tax on the next $1,250.00 or part thereof,
(8) 7% tax on the next $1,750.00 or part thereof,
(9) 8% tax on the next $3,000.00 or part thereof,
(10) 9% tax on the next $6,000.00 or part thereof, and
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(11) 10% tax on the remainder.
B. Individuals. For all taxable years beginning on or after
January 1, 2008, and ending any tax year which begins after December
31, 2015, for which the determination required pursuant to Sections
4 2355.1F and 5 2355.1G of this act title is made by the State Board
of Equalization, a tax is hereby imposed upon the Oklahoma taxable
income of every resident or nonresident individual, which tax shall
be computed as follows:
1. Single individuals and married individuals filing
separately:
(a) 1/2% tax on first $1,000.00 or part thereof,
(b) 1% tax on next $1,500.00 or part thereof,
(c) 2% tax on next $1,250.00 or part thereof,
(d) 3% tax on next $1,150.00 or part thereof,
(e) 4% tax on next $2,300.00 or part thereof,
(f) 5% tax on next $1,500.00 or part thereof,
(g) 5.50% tax on the remainder for the 2008 tax year and
any subsequent tax year unless the rate prescribed by
subparagraph (h) of this paragraph is in effect, and
(h) 5.25% tax on the remainder for the 2009 and subsequent
tax years. The decrease in the top marginal
individual income tax rate otherwise authorized by
this subparagraph shall be contingent upon the
determination required to be made by the State Board
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of Equalization pursuant to Section 2355.1A of this
title.
2. Married individuals filing jointly and surviving spouse to
the extent and in the manner that a surviving spouse is permitted to
file a joint return under the provisions of the Internal Revenue
Code of 1986, as amended, and heads of households as defined in the
Internal Revenue Code of 1986, as amended:
(a) 1/2% tax on first $2,000.00 or part thereof,
(b) 1% tax on next $3,000.00 or part thereof,
(c) 2% tax on next $2,500.00 or part thereof,
(d) 3% tax on next $2,300.00 or part thereof,
(e) 4% tax on next $2,400.00 or part thereof,
(f) 5% tax on next $2,800.00 or part thereof,
(g) 5.50% tax on the remainder for the 2008 tax year and
any subsequent tax year unless the rate prescribed by
subparagraph (h) of this paragraph is in effect, and
(h) 5.25% tax on the remainder for the 2009 and subsequent
tax years. The decrease in the top marginal
individual income tax rate otherwise authorized by
this subparagraph shall be contingent upon the
determination required to be made by the State Board
of Equalization pursuant to Section 2355.1A of this
title.
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C. Individuals. For all taxable years beginning on or after
January 1, 2024 tax year 2024, a tax is hereby imposed upon the
Oklahoma taxable income of every resident or nonresident individual,
which tax shall be computed as follows:
1. Single individuals and married individuals filing
separately:
(a) 0.25% tax on first $1,000.00 or part thereof,
(b) 0.75% tax on next $1,500.00 or part thereof,
(c) 1.75% tax on next $1,250.00 or part thereof,
(d) 2.75% tax on next $1,150.00 or part thereof,
(e) 3.75% tax on next $2,300.00 or part thereof, and
(f) 4.75% tax on the remainder.
2. Married individuals filing jointly and surviving spouse to
the extent and in the manner that a surviving spouse is permitted to
file a joint return under the provisions of the Internal Revenue
Code of 1986, as amended, and heads of households as defined in the
Internal Revenue Code of 1986, as amended:
(a) 0.25% tax on first $2,000.00 or part thereof,
(b) 0.75% tax on next $3,000.00 or part thereof,
(c) 1.75% tax on next $2,500.00 or part thereof,
(d) 2.75% tax on next $2,300.00 or part thereof,
(e) 3.75% tax on next $4,600.00 or part thereof, and
(f) 4.75% tax on the remainder.
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No deduction for federal income taxes paid shall be allowed to
any taxpayer to arrive at taxable income.
D. For tax year 2025 and subsequent tax years, there shall be
no tax imposed upon the Oklahoma taxable income of any resident or
nonresident individual.
E. Nonresident aliens. In lieu of the rates set forth in
subsection A above, there shall be imposed on nonresident aliens, as
defined in the Internal Revenue Code of 1986, as amended, a tax of
eight percent (8%) instead of thirty percent (30%) as used in the
Internal Revenue Code of 1986, as amended, with respect to the
Oklahoma taxable income of such nonresident aliens as determined
under the provision of the Oklahoma Income Tax Act.
Every payer of amounts covered by this subsection shall deduct
and withhold from such amounts paid each payee an amount equal to
eight percent (8%) thereof. Every payer required to deduct and
withhold taxes under this subsection shall for each quarterly period
on or before the last day of the month following the close of each
such quarterly period, pay over the amount so withheld as taxes to
the Oklahoma Tax Commission, and shall file a return with each such
payment. Such return shall be in such form as the Tax Commission
shall prescribe. Every payer required under this subsection to
deduct and withhold a tax from a payee shall, as to the total
amounts paid to each payee during the calendar year, furnish to such
payee, on or before January 31, of the succeeding year, a written
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statement showing the name of the payer, the name of the payee and
the payee’s Social Security account number, if any, the total amount
paid subject to taxation, and the total amount deducted and withheld
as tax and such other information as the Tax Commission may require.
Any payer who fails to withhold or pay to the Tax Commission any
sums herein required to be withheld or paid shall be personally and
individually liable therefor to the State of Oklahoma.
E. F. Corporations. For all taxable years beginning after
December 31, 2021 tax years 2022 through 2024, a tax is hereby
imposed upon the Oklahoma taxable income of every corporation doing
business within this state or deriving income from sources within
this state in an amount equal to four percent (4%) thereof. For tax
year 2025 and subsequent tax years, there shall be no income tax
imposed upon the Oklahoma taxable income of any corporation doing
business within this state or deriving income from sources within
this state.
There shall be no additional Oklahoma income tax imposed on
accumulated taxable income or on undistributed personal holding
company income as those terms are defined in the Internal Revenue
Code of 1986, as amended.
F. G. Certain foreign corporations. In lieu of the tax imposed
in the first paragraph of subsection D F of this section, for all
taxable years beginning after December 31, 2021 tax years 2022
through 2024, there shall be imposed on foreign corporations, as
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defined in the Internal Revenue Code of 1986, as amended, a tax of
four percent (4%) instead of thirty percent (30%) as used in the
Internal Revenue Code of 1986, as amended, where such income is
received from sources within Oklahoma this state, in accordance with
the provisions of the Internal Revenue Code of 1986, as amended, and
the Oklahoma Income Tax Act. For tax year 2025 and subsequent tax
years, there shall be no tax imposed on foreign corporations, as
defined in the Internal Revenue Code of 1986, as amended, where such
income is received from sources within this state, in accordance
with the provisions of the Internal Revenue Code of 1986, as
amended, and the Oklahoma Income Tax Act.
Every For tax years 2022 through 2024, every payer of amounts
covered by this subsection shall deduct and withhold from such
amounts paid each payee an amount equal to four percent (4%)
thereof. Every payer required to deduct and withhold taxes under
this subsection shall for each quarterly period on or before the
last day of the month following the close of each such quarterly
period, pay over the amount so withheld as taxes to the Tax
Commission, and shall file a return with each such payment. Such
return shall be in such form as the Tax Commission shall prescribe.
Every payer required under this subsection to deduct and withhold a
tax from a payee shall, as to the total amounts paid to each payee
during the calendar year, furnish to such payee, on or before
January 31, of the succeeding year, a written statement showing the
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name of the payer, the name of the payee and the payee’s Social
Security account number, if any, the total amounts paid subject to
taxation, the total amount deducted and withheld as tax, and such
other information as the Tax Commission may require. Any payer who
fails to withhold or pay to the Tax Commission any sums herein
required to be withheld or paid shall be personally and individually
liable therefor to the State of Oklahoma.
G. H. Fiduciaries. A tax is hereby imposed upon the Oklahoma
taxable income of every trust and estate at the same rates as are
provided in subsection B or C subsections B through D of this
section for single individuals. Fiduciaries are not allowed a
deduction for any federal income tax paid.
H. I. Tax rate tables. For all taxable years beginning after
December 31, 1991, in lieu of the tax imposed by subsection A, B or
C subsections A through D of this section, as applicable there is
hereby imposed for each taxable year on the taxable income of every
individual, whose taxable income for such taxable year does not
exceed the ceiling amount, a tax determined under tables, applicable
to such taxable year which shall be prescribed by the Tax Commission
and which shall be in such form as it determines appropriate. In
the table so prescribed, the amounts of the tax shall be computed on
the basis of the rates prescribed by subsection A, B or C
subsections A through D of this section. For purposes of this
subsection, the term “ceiling amount” means, with respect to any
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taxpayer, the amount determined by the Tax Commission for the tax
rate category in which such taxpayer falls.
SECTION 2. AMENDATORY 68 O.S. 2021, Section 2370, is
amended to read as follows:
Section 2370. A. For taxable years beginning after December
31, 2021 tax years 2022 through 2024, for the privilege of doing
business within this state, every state banking association,
national banking association and credit union organized under the
laws of this state, located or doing business within the limits of
the State of Oklahoma this state shall annually pay to this state a
privilege tax at the rate of four percent (4%) of the amount of the
taxable income as provided in this section.
B. 1. The privilege tax levied by this section shall be in
addition to the Business Activity Tax levied in Section 1218 of this
title and the franchise tax levied in Article 12 of this title and
in lieu of the tax levied by Section 2355 of this title and in lieu
of all taxes levied by the State of Oklahoma this state, or any
subdivision thereof, upon the shares of stock or personal property
of any banking association or credit union subject to taxation under
this section.
2. Nothing in this section shall be construed to exempt the
real property of any banking associations or credit unions from
taxation to the same extent, according to its value, as other real
property is taxed. Nothing herein shall be construed to exempt an
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association from payment of any fee or tax authorized or levied
pursuant to the banking laws.
3. Personal property which is subject to a lease agreement
between a bank or credit union, as lessor, and a nonbanking business
entity or individual, as lessee, is not exempt from personal
property ad valorem taxation. Provided further, that it shall be
the duty of the lessee of such personal property to return sworn
lists or schedules of their taxable property within each county to
the county assessor of such county as provided in Sections 2433 and
2434 of this title.
C. Any tax levied under this section shall accrue on the last
day of the taxable year and be payable as provided in Section 2375
of this title. The accrual of such tax for the first taxable year
to which this act the Oklahoma Income Tax Act applies, shall apply
notwithstanding the prior accrual of a tax in the same taxable year
based upon the net income of the next preceding taxable year;
provided, however, any additional deduction enuring to the benefit
of the taxpayer shall be deducted in accordance with the optional
transitional deduction procedures in Section 2354 of this title.
D. The basis of the tax shall be United States taxable income
as defined in paragraph 10 of Section 2353 of this title and any
adjustments thereto under the provisions of Section 2358 of this
title with the following adjustments:
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1. There shall be deducted all interest income on obligations
of the United States government and agencies thereof not otherwise
exempted and all interest income on obligations of the State of
Oklahoma this state or political subdivisions thereof, including
public trust authorities, not otherwise exempted under the laws of
this state; and
2. Expense deductions claimed in arriving at taxable income
under paragraph 10 of Section 2353 of this title shall be reduced by
an amount equal to fifty percent (50%) of excluded interest income
on obligations of the United States government or agencies thereof
and obligations of the State of Oklahoma this state or political
subdivisions thereof.
E. 1. Except as otherwise provided in paragraph 2 of this
subsection, before January 1, 2017, there shall be allowed a credit
against the tax levied in subsection A of this section in an amount
equal to the amount of taxable income received by a participating
financial institution as defined in Section 90.2 of Title 62 of the
Oklahoma Statutes pursuant to a loan made under the Rural Economic
Development Loan Act. Such credit shall be limited each year to
five percent (5%) of the amount of annual payroll certified by the
Oklahoma Rural Economic Development Loan Program Review Board
pursuant to the provisions of paragraph 3 of subsection B of Section
90.4 of Title 62 of the Oklahoma Statutes with respect to the loan
made by the participating financial institution and may be claimed
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for any number of years necessary until the amount of total credits
claimed is equal to the total amount of taxable income received by
the participating financial institution pursuant to the loan. Any
credit allowed but not used in a taxable year may be carried forward
for a period not to exceed five (5) taxable years. In no event
shall a credit allowed pursuant to the provisions of this subsection
be transferable or refundable.
2. No credit otherwise authorized by the provisions of this
subsection may be claimed for any event, transaction, investment,
expenditure or other act occurring on or after July 1, 2010, for
which the credit would otherwise be allowable. The provisions of
this paragraph shall cease to be operative on July 1, 2012.
Beginning July 1, 2012, the credit authorized by this subsection may
be claimed for any event, transaction, investment, expenditure or
other act occurring on or after July 1, 2012, according to the
provisions of this subsection.
SECTION 3. This act shall become effective November 1, 2025.
60-1-442 QD 12/30/2024 11:23:31 PM