How Much Is Oklahoma Income Tax & How Is It Calculated?

Oklahoma imposes an income tax on its residents’ earnings and on income derived from Oklahoma sources by non-residents. This state-level tax system operates on a progressive structure, meaning that higher income levels are subject to higher tax rates. Understanding how this system functions involves examining how taxable income is determined, the rates applied to that income, available credits and deductions, and the procedures for filing and payment.

Determining Oklahoma Taxable Income

Calculating Oklahoma taxable income begins with a taxpayer’s Federal Adjusted Gross Income (AGI). This federal figure then undergoes specific adjustments unique to Oklahoma’s tax code. These adjustments can either increase or decrease the initial AGI.

Several common subtractions can reduce Federal AGI for Oklahoma tax purposes. Social Security benefits included in Federal AGI are excludable from Oklahoma taxable income. Other retirement income, such as distributions from 401(k)s, IRAs, and pensions, can be subtracted up to $10,000 per individual. Federal Civil Service Retirement System (CSRS) benefits are also excludable.

Taxpayers contributing to an Oklahoma 529 college savings plan can also reduce their income. Individuals can deduct up to $10,000 in contributions annually, while those filing jointly can deduct up to $20,000. Qualifying capital gains can also be excluded from state taxable income. These adjustments ultimately lead to the Oklahoma Adjusted Gross Income, from which further deductions are taken to arrive at Oklahoma Taxable Income.

Oklahoma Income Tax Rates

Oklahoma utilizes a progressive income tax system. This structure features six distinct tax brackets, with rates ranging from 0.25% to 4.75% for the 2024 tax year. The specific rate applied depends on both the amount of taxable income and the taxpayer’s filing status.

For single individuals or those married filing separately:
The first $1,000 of taxable income is taxed at 0.25%.
Income between $1,000 and $2,500 is taxed at 0.75%.
Income from $2,500 to $3,750 is taxed at 1.75%.
Income from $3,750 to $4,900 is taxed at 2.75%.
Income between $4,900 and $7,200 is taxed at 3.75%.
Taxable income exceeding $7,200 is taxed at 4.75%.

For married filing jointly, heads of household, or qualifying widow(er)s, the income brackets are wider:
The initial $2,000 of taxable income is taxed at 0.25%.
Income from $2,000 to $5,000 is taxed at 0.75%.
Income from $5,000 to $7,500 is taxed at 1.75%.
Income from $7,500 to $9,800 is taxed at 2.75%.
Income between $9,800 and $12,200 is taxed at 3.75%.
Taxable income above $12,200 is taxed at 4.75%.

Common Oklahoma Tax Credits and Deductions

Tax credits and deductions serve to reduce a taxpayer’s Oklahoma income tax liability, though they function differently. Deductions reduce the amount of income subject to tax, thereby lowering the overall taxable income. Credits, conversely, directly reduce the amount of tax owed, providing a dollar-for-dollar reduction in the final tax bill.

Oklahoma offers a standard deduction that many taxpayers can claim if they do not itemize. The standard deduction amounts are $6,350 for single filers or married persons filing separately, $9,350 for heads of household, and $12,700 for married persons filing jointly or qualifying surviving spouses. Taxpayers who choose to itemize deductions on their federal return must also itemize on their Oklahoma return. Oklahoma itemized deductions are capped at $17,000, though charitable contributions and medical expenses are excluded from this limitation. Taxpayers may claim a personal exemption of $1,000 for themselves and each qualifying dependent, with extra exemptions available for those aged 65 or older or who are blind.

Beyond deductions, several tax credits are available to eligible Oklahoma taxpayers. The Oklahoma Parental Choice Tax Credit is a refundable credit for families with students in private schools, offering between $5,000 and $7,500 per student. For homeschooling families, a refundable credit of up to $1,000 per eligible student is available. The Equal Opportunity Education Scholarship Act provides a non-refundable credit for donations to eligible public school foundations or districts. This credit can be 50% of a one-time donation or 75% for a two-year pledge, with limits of up to $1,000 for individuals, $2,000 for joint filers, and $100,000 for qualified business entities.

Filing Requirements and Payment

Individuals residing in Oklahoma are required to file an Oklahoma income tax return if their gross income surpasses the sum of their standard deduction and personal exemption amount. Non-residents must also file if they have $1,000 or more in gross income sourced from Oklahoma. Specific filing requirements apply to part-year residents, who must file as a resident for their period of residency and as a non-resident if they had Oklahoma-source income during their non-residency period.

The deadline for most individual taxpayers to submit their Oklahoma income tax return is April 15th, aligning with the federal tax deadline. If a return is filed electronically, the due date is extended to April 20th, provided that any tax payment due is also remitted electronically by this extended deadline. If the payment for an electronically filed return is not made electronically by April 20th, penalties and interest may accrue from the original April 15th due date.

Taxpayers have options for submitting their returns, including electronic filing through tax software or the Oklahoma Tax Commission’s Taxpayer Access Point (OkTAP) system, or by mailing paper forms. Payment of any tax owed can also be completed through multiple methods:
Online payments via OkTAP (direct debit or credit/debit card, with potential service fee).
Payments by check or money order, accompanied by the appropriate payment voucher, mailed to the Oklahoma Tax Commission.