OKLAHOMA CITY (OBV) – A member of the Oklahoma House of Representatives filed a bill to gradually reduce Oklahoma’s personal and corporate income taxes until they are fully eliminated by 2035.
Rep. Jay Steagall, R-Yukon, filed House Bill 1009 on Thursday. He filed a nearly identical bill for consideration during the 2024 legislative session.
The new bill seeks to reduce the personal income tax rate by 0.00475 percent annually and the corporate income tax rate by 0.004 percent annually over 10 years.
“Recent polls show that Oklahomans overwhelmingly support the elimination of the state income tax, an effort for which I have filed legislation in the past two years and filing once again for the 60th Legislature,” Steagall said. “The state income tax is a clear violation of our own state constitution and I will continue to pursue righting this wrong in the upcoming session.”
The state income tax was created statutorily in 1915.
Oklahoma’s individual income tax system has six income tax brackets ranging from 0.5 percent to 4.75 percent for top earners. The 4.75 percent rate kicks in at a $7,000 annual income. The state also has a 4.0 percent corporate income tax rate.
All Oklahomans and more than 95 percent of businesses in the state pay the individual income tax. The income tax’s standard deduction is $6,350 for single filers and $12,200 for joint filers.
Former Oklahoma House of Representatives Speaker Charles McCall filed several tax cut bills during last year’s legislative session. Those bills are as follows:
- HB 2948 – Corporate income tax phase out over five years.
- HB 2949 – Flat rate 4.25 percent personal income tax effective Jan. 1, 2024; rate imposed on taxable income amounts above specific figures based on filing status.
- HB 2950 – .25 percent personal income tax decrease effective Jan. 1, 2024, and following tax years.
- HB 2951 – .25 percent personal income tax decrease for 2024 and 2025, with rates to restore to current level (current rates and brackets) for 2026, and following tax years.
- HB 2952 – .50 percent personal income tax decrease for 2024 and 2025, with rates to restore to current level (current rates and brackets) for 2026, and following tax years.
However, none of those bills succeeded.
Stitt has repeatedly pushed for income tax cuts. He called two special sessions last year – one in September and one before the start of the 59th Legislature – hoping that the legislature would move an income tax cut initiative forward.
However, former Pro Tem Greg Treat stymied Stitt’s income tax hopes, adjourning the Senate on the first day of both special sessions. He said both times that it would be irresponsible to pass tax cuts before knowing how much authorized funds the legislature would have.
Stitt, Treat and McCall worked together to cut the grocery tax in February, but Treat did not budge on his opposition to cutting the income tax.
The governor said earlier this year that he hopes to gradually give income tax cuts to Oklahomans.
“I think over the next 10 years, if we keep growing in the trajectory that we are. Maybe we can do it quicker, maybe we can do it in five years,” Stitt said. “But if we don’t keep up with the states around us, we will get left behind.”
Senate Pro Tem-elect Lonnie Paxton recently sat down with Oklahoma Business Voice for a one-on-one interview and said that reducing the income tax is a top priority for the 2025 legislative session.
