Note: This article has been updated to reflect the correct income tax percentage that SB 304 imposes.
OKLAHOMA CITY (OBV) – A bill to simplify Oklahoma’s tax code by establishing a flat income tax is making progress in the Oklahoma State Senate.
Senate Bill 304, written by Sen. Dave Rader, R-Tulsa, and Rep. Gerrid Kendrix, R-Altus, succeeded in the Senate Revenue & Taxation Committee on Wednesday with an 8-3 vote.
Sen. Chuck Hall, R-Perry, spoke in support of the bill ahead of the vote. He commended Rader’s exhaustive efforts to reform Oklahoma’s tax code. He said Rader’s idea to flatten the income tax is an idea worthy of further consideration.
“We have seen already and will continue to see a host of ideas related to tax policy, to making changes to tax policy,” Hall said. “Many of these policies we’re going to like, and many of them we’re going to dislike. But I don’t think we should discount ideas and suggestions because, frankly, there’s only a few that are actually bringing these ideas and suggestions. And so, when they actually get put in front of us, I think we should consider them, for those reasons and those reasons alone.”
SB 304 does the following:
- Imposes a flat 4.75 percent income tax;
- Provides that no deduction for federal income taxes paid shall be allowed to any taxpayer to arrive at taxable income;
- Specifies a standard deduction for individuals and joint filers; and
- Establishes a standard deduction of $13,550 for single filers, $24,900 for joint filers and $19,225 for individuals filing the head of a household.
Chad Warmington, president and CEO of The State Chamber of Oklahoma, said SB 304 is beneficial to Oklahoma because it simplifies the tax code.
“It collapse the brackets. We have a progressive tax rate right now where there’s six different tax brackets. This would collapse it to one,” Warmington said.
The bill pairs the collapsing of the brackets with raising the standard deduction, which Warmington said provides fairness across the board.
“What we like about it is all this talk about potentially lowering the top rate. If you collapse the brackets and you raise the standard deduction, now it applies evenly across the board,” Warmington said. “So, it simplifies Oklahoma’s tax code. It makes it fair. It’s not a disincentive to make more because the more you earn in Oklahoma the more you pay in taxes.”
Raising the standard deduction helps Oklahomans at the lower end of the pay scale as well.
“Because most of those people claim the standard deduction. Our proposal would double the standard deduction from $6,000-$12,000 approximately. And so what it does is it just provides fundamental fairness across it. And then if you want to go back in the legislature and pursue a top rate tax cut, when they do it applies evenly across the board,” Warmington said. “So, it’s really simplification. And it makes our tax code more competitive.”
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 and it is one of his top priorities for 2025.
