OKLAHOMA CITY (OBV) – Gov. Kevin Stitt and Oklahoma legislative leaders have agreed on a budget for the state that includes Stitt’s long-sought-after income tax cut as well as tort reform.
Stitt and legislative leaders gathered in the State Capitol’s Blue Room on Wednesday to announce a budget with numerous touted reforms, including a .25 percent income tax cut, reducing the state’s current 4.75 percent income tax rate to 4.5 percent. The cut serves as the first step in the path to zero income tax in the state, Stitt said.
The new income tax cut plan eliminates the bottom three of Oklahoma’s six income tax brackets.
“I’ve been here all session and all my years in Oklahoma talking about making Oklahoma a top 10 state,” Stitt said. “Getting us on the path to zero [income tax], we’ve come up with a plan for that.”
The governor said he hoped to consolidate the state’s six brackets into one flat rate, but that the chosen plan is a responsible one.
The agreed upon income tax plan strengthens Oklahoma’s business community over the long term. The tax cut will grow the economy by making Oklahoma more competitive, according to Stitt.
“The path is a big signal to the business community. As the revenue grows, let’s invest that back into the business community,” Stitt said. “I think that’s a responsible way. As you have additional revenue, we’re going to give some of that back to the tax payer.”
Senate President Pro Tempore Lonnie Paxton and House Speaker Kyle Hilbert and several Republican legislators flanked Stitt during the news conference.
Stitt also announced that the budget includes tort reform measurers that will protect medical providers as well the creation of business courts.
Tort reform is a major component of the budget package, according to Paxton.
“Tort reform is a huge win for the state of Oklahoma,” Paxton said. “The tort reform package has been worked on for years. This year we really put an emphasis on it.”
Hilbert touted the united effort that went into putting the budget together, saying that disagreeing without being disagreeable went towards putting together a budget that everyone at the table could get behind.
“This is a budget to be proud of. We are still sitting on $3.5 billion in savings,” he said. “That is a great place to be as we prepare for the future.”
Cutting Oklahoma’s income tax rate has been Stitt’s top priority. He announced his “Half and a Path” plan during his State of the State address in early February. He described the plan as a half a point income tax reduction from the current 4.75 percent rate to a 4.25 percent rate. He said it’s an action that will start a path towards zero income tax in Oklahoma.
“I like to remind the naysayers when we cut taxes, the money doesn’t disappear, it stays in Oklahomans’ pockets and gets reinvested in our economy,” he said earlier this year.
Stitt reiterated his want for an income tax cut during a recent news conference, saying Oklahoma is in an economically viable position to cut the income tax.
He emphasized the state’s $11.24 billion in income from all revenue sources and $11.17 billion in expenses for 2026. He then touted Oklahoma’s $4.6 billion in savings.
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.
Stitt has repeatedly pushed for income tax cuts. He called two special sessions in 2023 – 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 former House Speaker Charles McCall worked together to cut the grocery tax in February 2024, but Treat did not budge on his opposition to cutting the income tax.
Paxton 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.
