Bill No. 2194, introduced by Representatives Wolfley and Bullard, amends Section 2358 of the Oklahoma Statutes to refine the calculation of taxable income and adjusted gross income for both corporations and individuals. Key adjustments include the addition of interest income from state obligations that are not exempt under other laws and the deduction of amounts that cannot be taxed due to constitutional or legal prohibitions. The bill also outlines how federal net operating loss deductions should be adjusted based on the source of the loss and taxable year, with provisions for carryovers and carrybacks. It establishes a framework for apportioning net income from unitary business enterprises and clarifies tax treatment for various income sources, including exemptions for retirement income.

Additionally, the bill proposes specific standard deduction amounts for different filing statuses, effective for taxable years beginning on or after January 1, 2017, and introduces a new exemption for retirement benefits, increasing the exempt amount to $20,000 for the 2026 tax year and beyond. It allows military personnel to deduct 100% of their income from the United States as salary or compensation and provides deductions for individuals with physical disabilities for necessary modifications. The bill also includes provisions for tax deductions related to organ donations and clarifies the treatment of retirement benefits from the Armed Forces and federal civil service retirees. The Oklahoma Tax Commission is tasked with creating rules for implementing these changes, which are set to take effect on November 1, 2025.

Statutes affected:
Introduced: 68-2358
Floor (House): 68-2358
Engrossed: 68-2358