The bill amends Section 2355 of the Oklahoma income tax law, introducing new tax brackets and rates for individual taxpayers starting in tax year 2024, with a gradual reduction in tax rates over the following years. For example, single individuals will be taxed at a rate of 0.25% on the first $1,000 of income in 2024, while married couples filing jointly will be taxed at the same rate on the first $2,000. The bill outlines further reductions, leading to a 0% tax rate on the first $2,500 for single individuals in 2025 and ultimately eliminating individual income tax by 2029. Additionally, the bill establishes a flat tax rate of 4% on Oklahoma taxable income for corporations starting after December 31, 2021, and prohibits deductions for federal income taxes paid.

Moreover, the bill modifies the taxation of trusts and estates, imposing the same tax rates applicable to single individuals and explicitly prohibiting fiduciaries from deducting federal income taxes paid. It also introduces new tax rate tables for taxable years beginning after December 31, 1991, replacing the previous tax structure. The new tax rates for individuals with taxable income below a specified ceiling will be determined based on these tables, which will be prescribed by the Tax Commission. The bill is set to take effect on November 1, 2025.

Statutes affected:
Introduced: 68-2355