Budget & Tax
Ray Carter | April 7, 2025
Phaseout of Oklahoma income tax continues to advance
Ray Carter
Legislation that would gradually phase out Oklahoma’s tax on work and investment—the personal income tax—continues to move ahead, clearing its first Oklahoma Senate hurdle this week.
House Bill 1539, by state Rep. Mark Lepak and state Sen. Micheal Bergstrom, 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each time that net state revenue increases by at least $300 million, continuing the process until the tax is completely repealed.
State Sen. Julia Kirt, D-Oklahoma City, opposed the bill.
“What we’re doing is hamstringing future legislatures,” Kirt said.
But Bergstrom noted that eight other states have adopted similar “trigger” laws that implement tax cuts when revenue collections increase by a certain amount.
Arizona’s law has resulted in its personal income tax being cut from a 4.5-percent rate to 2.5 percent. Kentucky’s trigger law has cut a half-point off its income tax rate. Missouri’s law has reduced its rate from 6 percent to 4.7 percent today. North Carolina’s trigger law has reduced its tax rate from 5.8 percent to 4.5 percent today.
“Triggers work,” Bergstrom said.
The proposal advanced in Oklahoma at a time when policymakers in Mississippi are celebrating the adoption of a similar plan that will eliminate that state’s income tax over time.
HB 1539 previously passed the Oklahoma House of Representatives on a 76-20 vote. The bill cleared the Senate Revenue and Taxation Committee on a 10-2 vote.
Oklahoma’s current 4.75 percent personal income tax rate is among the highest in the region.
Texas has no personal income tax. 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. And officials in Kansas recently voted to gradually cut their tax to 4 percent.
Notably, five states with no personal income tax also have the same or lower effective property tax rates than Oklahoma.
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.