Oklahoma made great strides in reducing its penalty on work, the state income tax, throughout the 2000s. Between 2004 and 2012, the state reduced its top income-tax rate from 7 percent to 5.25 percent. That progress has stalled out, however, as the state has only cut the income-tax rate twice since then, bringing the top rate down to 4.75 percent. Unfortunately for Oklahoma, as the state slowed its tax cut pace many other states sped up.

Over the last decade, Oklahoma has cut its income tax by 9.5 percent (moving from a top rate of 5.25 percent to 4.75 percent). Over that same time, 14 other states cut the income tax rate by a larger percentage than Oklahoma, with 22 states overall reducing their income tax rate. 

Source: Tax Foundation, author’s calculation 

Arizona led the way with a 45 percent reduction—moving from a rate of 4.54 percent to a rate of 2.50 percent—the lowest rate among states that still levy an income tax. Our neighboring state, Arkansas, had the second-largest reduction in its income tax rate, moving from 7 percent to 4.4 percent. That’s a 37 percent cut.

Out of the 14 states that out-cut Oklahoma, five went from having a higher income-tax rate than Oklahoma’s to a lower one. Missouri will push this list to six with an income-tax cut taking effect this year moving its rate to 4.7 percent. 

The tax cut trend has been ongoing for some time and does not appear to be slowing. Low-income-tax states have been outgrowing their counterparts for some time. Tax-cutting states are even growing government revenues faster than everyone else.  

Oklahoma is running out of excuses not to eliminate its penalty on work. This upcoming session gives the legislature another chance to join the pro-growth movement.