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An Act
ENROLLED SENATE
BILL NO. 573 By: Rader of the Senate
and
Pae of the House
An Act relating to small business incubators;
amending 74 O.S. 2021, Section 5078, which relates to
state income tax exemption and annual reports;
requiring tenant to submit certain information to
receive certain exemption; requiring the Oklahoma
Department of Commerce to prescribe certain form;
requiring certain information to be included in
annual report provided by the Department; and
providing an effective date.
SUBJECT: Small business incubator income tax exemption
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 74 O.S. 2021, Section 5078, is
amended to read as follows:
Section 5078. A. For a period of up to ten (10) years from the
date of tenant’s occupancy in an incubator, income earned by the
tenant as a result of activities conducted as an occupant in an
incubator, including income distributed to partners, shareholders of
a corporation for which a Subchapter S election is in effect and to
the members of a limited liability company, shall be exempt from
state income tax. The exemption provided by this section shall
remain in effect for such activities by such tenant after the date
the tenant is no longer an occupant in an incubator, but not to
exceed a total duration of ten (10) years for any tenant.
B. For tax years ending before January 1, 2020, in order to
qualify for the income tax exemption for the sixth through tenth
year as authorized by this section, the tenant must make at least
ENR. S. B. NO. 573 Page 2
seventy-five percent (75%) of its gross sales constituting the
principal business activity of the business to buyers located
outside the state or to buyers whose principal business activity is
conducted outside the state or to the federal government or to
buyers located within the state if the product or service is resold
to an out-of-state customer or buyer for ultimate use. Provided, if
a tenant does not achieve the qualifying percentage for any one of
the above tax years, the tenant shall not be disqualified for
subsequent tax years in which the qualifying percentage is achieved.
C. For tax year 2026 and subsequent tax years, following the
first tax year a tenant is provided the exemption pursuant to
subsection A of this section, in order to continue to qualify for
the exemption, the tenant shall submit information on a form
prescribed by the Oklahoma Department of Commerce which shall
include, but not be limited to, the following:
1. Employment levels, including full-time-equivalent levels and
the ratio of part-time employees to full-time employees;
2. Interns employed;
3. Payments to subcontractors and their purpose;
4. Estimated gross annual revenues;
5. Estimated annual costs for property and services;
6. A statement of any additional financial assistance,
incentives, credits, or exemptions provided by this state or any
political subdivision of this state; and
7. A statement of any taxable income exempted pursuant to this
subsection in the previous tax year.
The Oklahoma Tax Commission shall promulgate rules to implement
the provisions of this section.
SECTION 2. This act shall become effective November 1, 2025.
ENR. S. B. NO. 573 Page 3
Passed the Senate the 12th day of March, 2025.
Presiding Officer of the Senate
Passed the House of Representatives the 6th day of May, 2025.
Presiding Officer of the House
of Representatives
OFFICE OF THE GOVERNOR
Received by the Office of the Governor this ____________________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________
Approved by the Governor of the State of Oklahoma this _________
day of ___________________, 20_______, at _______ o'clock _______ M.
_________________________________
Governor of the State of Oklahoma
OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this __________
day of __________________, 20 _______, at _______ o'clock _______ M.
By: _________________________________