Budget & Tax
Oklahoma lawmakers take bold stance for working families
February 7, 2024
By voting to cut Oklahoma’s personal income tax immediately, members of the Oklahoma House of Representatives have demonstrated they understand the financial pressures bearing down on working families across our state.
Due to the rampant inflation caused by Biden administration policies—inflation that still remains far too high—many Oklahomans have effectively taken a pay cut over the last three years. While reducing the personal income tax will not make them whole, it is a step in the right direction and puts more money into families’ pockets while also increasing the incentive to expand jobs and opportunity in Oklahoma.
House Bill 1002XXX would cut Oklahoma’s top personal income tax rate from 4.75 percent to 4.5 percent. As written, the bill would take effect retroactively on Jan. 1, 2023, meaning the benefit would immediately accrue to Oklahomans filing their 2023 returns by April 15 of this year.
“It is time to help the people of the state of Oklahoma,” said House Speaker Charles McCall, R-Atoka. “They do a better job of spending their money than we do.”
“It takes more to live today, to buy everyday goods—groceries, fuel—and so it is definitely time to cut taxes,” said House Appropriations and Budget Chairman Kevin Wallace, R-Wellston.
State Rep. Mark Lepak, R-Claremore, noted that over the last 20 years all Oklahoma government tax collections have increased 3.94 percent year over year even as the personal income tax rate was reduced from 7 percent to the current rate of 4.75 percent.
During that same period, Oklahoma’s gross domestic product grew just 1.96 percent year over year, adjusted for inflation, and Oklahomans’ personal income has increased just 1.45 percent year over year.
“What does it tell you when overall tax collections are growing at twice the economy’s growth, two-and-a-half times that of our personal income?” Lepak said. “It tells me that we are setting a spending expectation that we won’t be able to sustain long term.”
Supporters also noted that Oklahoma now has a historic level of state savings—billions of dollars in reserve—that will preserve existing programs in a future downturn. Having provided that safeguard there is no serious argument against cutting taxes.
HB 1002XXX passed the Oklahoma House of Representatives on a 71-20 vote. All Republicans present voted for the bill.
Now members of the Oklahoma Senate can finish the job by passing HB 1002XXX and sending the tax cut to Gov. Kevin Stitt to be signed into law.
Many senators are prepared to do just that. Several senators, who represent a combined 1 million Oklahomans, have already signed a pledge to support and work for passage of an income-tax cut this year.
The quarter-point tax cut, alone, is not a magic bullet. More needs to be done to further reduce and eliminate Oklahoma’s penalty on work, the income tax. But this is a good start.