(The Center Square) – Oklahoma Gov. Kevin Stitt has signed a bundle of bills into law that will lower corporate and top-tier income tax rates, in addition to restoring the earned income tax credit.
Ray Carter, director of Center for Independent Journalism at Oklahoma Council of Public Affairs, said the personal income-tax reduction is a quarter-point for all tax brackets.
"As I understand it, just a handful of income-tax states will have a lower rate, such as North Dakota, Pennsylvania, Indiana, Michigan and Colorado," Carter told The Center Square. "The rate reduction is expected to save the average Oklahoma taxpayer $152 each year, and the rate will benefit many small-business owners who simply pay the personal income tax."
Oklahoma's top bracket kicks in at less than $10,000 for an individual, so for all intents and purposes, nearly all working people are in the top bracket, where the rate will decline from 5% to 4.75%. The lower rate will be one of the lowest among states that levy a personal income tax.
"It is generally agreed that Oklahoma’s income tax is a deterrent to business growth, recruitment and investment, especially since we border Texas, which has no income tax," Carter said. "While Oklahoma’s income tax remains in place, any action that reduces it improves the state’s attractiveness for investment and job creation."
Carter said the Earned Income Tax Credit change applies only to individuals who qualified for the credit but owed no income tax, and provides a direct payment from the state rather than a tax credit.
Overall, HB 2962 is expected to increase Oklahomans’ take-home pay by about $170 million per year.
The tax reduction is also an attempt by Stitt to make Oklahoma a top-ten state for business by making the business taxes among the lowest in the nation.