Senate advances Oklahoma income tax cut bill

OKLAHOMA CITY – The Oklahoma Senate on April 10 advanced a bill that could lead to the elimination of the state’s income tax, despite concerns that it benefitted the wealthy.

House Bill 1539 passed by a vote of 36-9 and returns to the House for consideration.

Under the measure, if revenue exceeds the fiscal year 2023 baseline of nearly $13.2 billion by $300 million, it will trigger a 0.245% tax cut beginning in budget year 2026.

The cut is expected to cost $108.2 million, according to Senate staff and the Oklahoma Tax Commission.

If triggered in fiscal year 2027, the cost would be $272.5 million, according to the Oklahoma Tax Commission.

If there is no growth, the cut will not be triggered.

“It creates a pathway to the eventual elimination of the state income tax with guardrails in place to make sure there will be no tax rate cut during down economic years,” said Sen. Micheal Bergstrom, R-Adair, the Senate author.

Sen. Brent Howard, R-Altus, opposed the measure, saying he didn’t think enough thought went into the measure.

Taxing labor disincentivizes productivity, said Sen. Dusty Deevers, R-Elgin, who voted for the bill.

“Taxing people’s wages is bad because it undermines liberty,” Deevers said. “It undermines people’s freedoms. If government controls income, then it controls your life.”

Sen. Mary Boren, D-Norman, said it takes a simple majority in the Legislature to decrease taxes but a super majority to raise them. Voters in 1992 passed  State Question 640 putting restrictions on tax hikes.

The bill does not take into account additional services, such as education, that will be needed in the future, Boren said.

Senate Minority Leader Julia Kirt, D-Oklahoma City, said the bottom 20% in income might get back $15 while the top 1% will receive $6,000.

Oklahoma’s top income tax rate is 4.75%. Most Oklahomans fall into the top bracket.

Gov. Kevin Stitt has called for an income tax reduction with a path toward elimination.

Oklahoma Voice (oklahomavoice.com) is an affiliate of States Newsroom, the nation’s largest state-focused nonprofit news organization, supported by grants and donations. Oklahoma Voice provides nonpartisan reporting, and retains full editorial independence.