What Percentage of Taxes Are Taken Out in Oklahoma?

Oklahoma’s tax system includes various categories, each with its own structure and rates. These taxes are levied by state and local authorities to fund public services and infrastructure. Understanding how these percentages are applied across different income levels, goods, services, and properties provides clarity on the tax obligations for individuals and businesses within Oklahoma.

Individual Income Tax in Oklahoma

Oklahoma employs a progressive individual income tax system, meaning higher incomes face higher tax rates. For 2024, the state uses six tax brackets, with rates from 0.25% to a top rate of 4.75%. The specific percentage of income taken out depends on an individual’s taxable income and filing status. For instance, single filers or those married filing separately face a 0.25% rate on the first $1,000 of taxable income, progressing to 4.75% for income exceeding $7,200. Married individuals filing jointly, heads of household, and qualifying surviving spouses benefit from wider income brackets for each rate, with the 4.75% rate applying to taxable income above $14,400.

The actual percentage of income subject to taxation is influenced by available deductions and exemptions, which reduce an individual’s taxable income. Oklahoma provides a standard deduction for non-itemizers, with amounts varying by filing status for 2024. Taxpayers who itemize deductions on their federal return are generally required to itemize on their Oklahoma return as well. Oklahoma’s itemized deductions are capped at $17,000, although charitable contributions and medical expenses are excluded from this limitation. Additionally, a personal exemption of $1,000 can be claimed for the taxpayer, spouse, and each qualifying dependent, further reducing the taxable income.

Sales Tax in Oklahoma

Oklahoma imposes a statewide sales tax rate of 4.5% on the sale or rental of tangible personal property and certain services. However, the total sales tax percentage paid by consumers is often higher due to the addition of local sales taxes levied by cities, counties, and other special districts. These local rates can vary significantly, ranging from 0% to as high as 7% in some areas.

The combination of the state and local rates means that the total sales tax percentage can range from the state’s base 4.5% to as much as 11.5%. For example, a purchase in Oklahoma City includes the 4.5% state sales tax plus a 4.125% city sales tax, resulting in a combined rate of 8.625%. Effective August 29, 2024, “food and food ingredients” are exempt from the state’s 4.5% sales tax. This exemption applies to most grocery items, including bottled water, candy, and soft drinks. However, local sales taxes will continue to apply to groceries, and prepared foods, alcoholic beverages, and dietary supplements remain subject to the full state and local sales tax rates.

Property Tax in Oklahoma

Property taxes in Oklahoma are levied at the local level by entities such as counties, cities, and school districts, and they are based on the assessed value of real and personal property. The assessed value is a percentage of the property’s fair cash value, not its market value. For real property, the assessment ratio ranges between 11% and 13.5% of the fair cash value, depending on the county. Personal property typically has a higher assessment ratio, ranging from 10% to 15%.

The actual tax percentage is expressed as a “millage rate,” where one mill represents $1 in tax for every $1,000 of taxable value. These millage rates are determined by various local taxing authorities to meet their budgetary needs and can vary widely across different locations within the state. To calculate the property tax, the property’s taxable value (assessed value minus any exemptions) is multiplied by the combined millage rate for all applicable local authorities. A common exemption is the homestead exemption, which reduces the taxable value of an owner-occupied primary residence by $1,000.

Vehicle and Other State Taxes in Oklahoma

Beyond income, sales, and property taxes, Oklahoma levies other specific taxes that include percentage components. When purchasing a new vehicle, individuals are subject to a motor vehicle excise tax of 3.25% of the vehicle’s price. For used vehicles, the excise tax structure varies, often involving a flat fee on the initial portion of the price and a percentage rate on the remainder.

Another common state tax is the motor fuel tax. Oklahoma imposes an excise tax of 19 cents per gallon on both gasoline and diesel fuel. This tax is typically included in the price paid at the pump, contributing to state and local transportation funds; local governments do not impose their own motor fuel taxes.