This bill amends Section 2355 of the Oklahoma income tax law, introducing new tax brackets and rates for individuals from 2024 to 2032, ultimately leading to the complete elimination of income tax for individuals starting in 2032. The new tax rates for single individuals will begin at 0.25% for the first $1,000 in 2024, increasing to 4.75% on the remainder, while married individuals filing jointly will have similar rates starting at 0.25% for the first $2,000. The bill also specifies that no deductions for federal income taxes paid will be allowed in calculating taxable income. Additionally, it updates statutory language and references, incorporating the Internal Revenue Code of 1986 into the definitions of filing statuses and replacing outdated references to ensure clarity in the tax structure.

Moreover, the bill proposes significant changes to the taxation of nonresident aliens and corporations in Oklahoma, reducing the tax rate for nonresident aliens from 30% to 8% on their Oklahoma taxable income and establishing a 4% tax rate for foreign corporations, down from 30%. It mandates that payers withhold these specified tax rates and remit them to the Oklahoma Tax Commission. The bill also imposes a 4% tax on the Oklahoma taxable income of all corporations doing business in the state, effective for taxable years beginning after December 31, 2021, and clarifies that there will be no additional Oklahoma income tax on accumulated taxable income or undistributed personal holding company income. The act is set to take effect on November 1, 2025.

Statutes affected:
Introduced: 68-2355