Budget & Tax
Ray Carter | March 25, 2025
Oklahoma House votes to phase out income tax
Ray Carter
Members of the Oklahoma House of Representatives have voted to phase out the state’s personal income tax by a margin of more than three to one.
The proposal advanced in Oklahoma as policymakers in Mississippi were celebrating the adoption of a similar plan in that state.
House Bill 1539, by state Rep. Mark Lepak, R-Claremore, would cut Oklahoma’s 4.75-percent personal income-tax rate by a quarter point each time that net state revenue increases by at least $300 million, continuing the process until the tax is completely repealed.
Lepak noted that elimination of the personal income tax can be achieved without increasing any other taxes.
“You actually won’t need any ‘replacement’ revenue,” Lepak said.
He noted that over the last 30 years Oklahoma state tax collections have increased, on average, by 4.1 percent year-over-year. If you exclude the last five years, which were impacted by Covid, the state-revenue growth rate of the prior 25 years averaged 3.1 percent growth year-over-year.
“You actually won’t need any ‘replacement’ revenue.” —State Rep. Mark Lepak (R-Claremore)
At that growth rate, the loss of income tax collections would be more than offset by increased tax collections from other sources at existing rates, he noted.
“The projection in the example I gave assumed that same growth rate and as we hit this $300 million trigger, reduced a quarter-percent,” Lepak said. “And you can see total revenues grow from the $12-billion range to the $20-billion range throughout the process.”
Oklahoma’s current 4.75 percent personal income tax rate is among the highest in the region.
Texas has no personal income tax while Colorado imposes a 4.4 percent rate. Officials in Arkansas have cut their rate to 3.9 percent. The top rate in Missouri fell to 4.7 percent in January. Louisiana has cut its income-tax rate to 3 percent.
Among bordering states, only two—Kansas and New Mexico—currently have higher personal income-tax rates than Oklahoma.
In addition, five states with no personal income tax also have the same or lower effective property tax rates than Oklahoma.
HB 1539 passed the Oklahoma House of Representatives on a 76-20 vote. The bill now proceeds to the Oklahoma Senate.
Ray Carter
Director, Center for Independent Journalism
Ray Carter is the director of OCPA’s Center for Independent Journalism. He has two decades of experience in journalism and communications. He previously served as senior Capitol reporter for The Journal Record, media director for the Oklahoma House of Representatives, and chief editorial writer at The Oklahoman. As a reporter for The Journal Record, Carter received 12 Carl Rogan Awards in four years—including awards for investigative reporting, general news reporting, feature writing, spot news reporting, business reporting, and sports reporting. While at The Oklahoman, he was the recipient of several awards, including first place in the editorial writing category of the Associated Press/Oklahoma News Executives Carl Rogan Memorial News Excellence Competition for an editorial on the history of racism in the Oklahoma legislature.