Because the income tax is a penalty on work and investment, the argument for cutting income taxes is that it lowers the penalty and therefore increases the incentives that produce economic growth.

Newly released state revenue figures show that is exactly how things are playing out in Oklahoma.

During Gov. Kevin Stitt’s second term, the personal income tax has been reduced from 5 percent to 4.5 percent, and the 4.5 percent sales tax on groceries has been wiped out. Opponents argued that would translate into major revenue reductions.

But the state ended the 2026 fiscal year, which concluded on June 30, with $142 million more than what was collected in 2025 and $612 million more than what was estimated.

“This is exactly what happens when you cut taxes, trust Oklahoma families and businesses, and keep government accountable,” Stitt said. “Oklahoma’s economy is strong, our revenues are up, and we’re proving year after year that conservative leadership works.”

The state Office of Management and Enterprise Services (OMES) announced that General Revenue Fund (GRF) collections for fiscal year 2026 totaled $8.9 billion, which was $612.1 million, or 7.4 percent, above the estimate for the year. The total was also $142.4 million above collections from FY 2025.

GRF collections in June were $991.3 million, which was $153.8 million, or 18.4 percent, above the monthly estimate and $44.8 million above collections from June 2025.

“The State of Oklahoma ended FY 2026 in a strong financial position, with General Revenue Fund collections finishing ahead of both estimates and last year’s level,” said OMES Director Mark Wood. “Exceeding prior-year collections for the second consecutive year and surpassing the full-year estimate for the sixth consecutive year reflects the strength of Oklahoma’s economy and the disciplined fiscal management that continues to guide our state.”

The six straight years of finishing above revenue estimates have followed $1.6 billion in combined tax cuts since 2019.

Oklahoma lawmakers have also enacted a law that earmarks a share of future revenue growth to tax cuts. Under that plan, the state income tax will continue to decline until it has been completely repealed even as state government funding is maintained.

Oklahoma has enjoyed strong population growth as taxes have declined during Stitt’s two terms in office, attracting net-positive migration from other states that routinely ranks among the top 15 and even top 10 states.

Oklahoma’s tax-cutting efforts have occurred against a backdrop of fierce competition with other states, as officials across the country have adjusted tax policy to better attract investment and fuel job creation.

Since 2022, officials in neighboring Arkansas have lowered that state’s personal income tax from 5.5 percent to 3.9 percent today, giving it a lower rate than Oklahoma. Neighboring Texas has long benefited from having no personal income tax and has been among the top states for economic growth for years.

Other states have also cut taxes. Policymakers in Iowa cut their top rate from 8.53 percent in 2022 to 3.8 percent today. Kentucky officials cut their top rate from 5 percent to 3.5 percent during the same period.

In a press release, Stitt’s office pointed to the newly released state revenue figures, saying they reinforce “that Oklahoma can lower the burden on taxpayers while maintaining strong fiscal health and delivering results.”

“During my administration, we have cut more than $1.6 billion in taxes and put Oklahoma on the path to a zero-income tax state,” Stitt said. “Our economy is shining, and Oklahomans continue to deliver tax revenue to meet the needs of core government services.”