House Bill No. 2740, introduced by Kendrix, proposes significant amendments to Oklahoma's income tax laws, particularly affecting individual income tax rates and personal exemptions. The bill eliminates the previous tax rates for individuals starting in 2024 and introduces a flat tax rate of 4.75% on all taxable income. It also revises the provisions related to personal exemptions and standard deduction amounts to simplify the tax structure and potentially lessen the tax burden on residents. Additionally, the bill establishes a uniform tax rate of 4% for corporations and reduces the tax rate for nonresident aliens from 30% to 8%, aiming to enhance compliance with federal tax regulations while maintaining competitiveness.

Moreover, the bill addresses various deductions and exemptions, including those related to military service, retirement benefits, and adoption expenses. It fully exempts retirement benefits from the Armed Forces from taxable income starting in 2022, replacing a previous tiered exemption system. The bill also allows for a deduction of up to $10,000 for individuals donating human organs and introduces a deduction for contributions to the Achieving a Better Life Experience (ABLE) Program. Other provisions include the exemption of certain payments from competitive livestock shows and clarifications on capital gains treatment. The effective date for these changes is set for January 1, 2026.

Statutes affected:
House Committee Substitute: 68-2355, 68-2358
Floor (House): 68-2355, 68-2358
Sub Committee OR Policy Committee Recommendations (House) Sub Committee Recommendation: 68-2355, 68-2358