Budget & Tax

Stitt seeks income-tax cut

Ray Carter | January 29, 2025

With only a few days left before the start of the 2025 legislative session, Gov. Kevin Stitt announced he will seek to cut Oklahoma’s personal income tax from the current rate of 4.75 percent to 4.25 percent this year.

“My goal this year is a ‘half-and-a-path’: a half-a-point tax cut and a path to zero,” Stitt said. “We’re not cutting core services. But what that will do is limit the growth of government.”

Oklahoma’s current 4.75 percent personal income tax rate, also known as the “penalty on work,” is among the highest in the region.

Texas has no personal income tax while Colorado imposes a 4.4 percent rate most years and recently provided a temporary reduction to 4.25 percent. When Arkansas Gov. Sarah Huckabee Sanders took office in 2023, the top individual tax rate in Arkansas was 4.9 percent, but has since been cut to 3.9 percent. Similarly, the top rate in Missouri fell to 4.7 percent this month, leapfrogging Oklahoma. Louisiana, another state in the region, has cut its income-tax rate to 3 percent and has a “trigger” law in place to further cut the rate as revenue increases in future years.

Among bordering states, only Kansas and New Mexico have higher personal income-tax rates than Oklahoma.

Several other states across the nation have also cut taxes in recent years and now have a lower personal income-tax rate than Oklahoma.

“Government will spend every dime that you give them. … There has to be a limit on it.” —Gov. Kevin Stitt

Currently, 14 states now have a flat tax, while nine states do not impose an income tax on wages (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming). And some states with a flat tax have rates well below Oklahoma’s top rate of 4.75 percent, such as Arizona, which has a flat rate of 2.5 percent.

Several lawmakers have filed legislation this year that would achieve Stitt’s goal of gradually eliminating the personal income tax. Those plans typically involve an automatic reduction in the tax rate each year that state revenues grow by a specific amount and continue that process over time until the tax is fully repealed.

While several state agencies have requested spending increases this year, Stitt said those requests should not be prioritized over tax relief for Oklahomans.

“Government will spend every dime that you give them,” Stitt said. “There’s never a shortage of good ideas. People come to you every year and they want more, and if you give them more taxpayer money look how much more good they think they can do. But there has to be a limit on it.”

He noted that New York and Florida both have roughly 20 million citizens apiece, yet the state budget in New York is more than $230 billion while Florida’s budget is $115 billion. New York imposes an income tax of 10.9 percent to fund that government bloat, Stitt noted, while Florida has no state income tax and still provides law enforcement, schools, roads, and other basic government functions.

He cautioned against continually increasing state spending and stressed that the rate of spending increase imposed in recent years cannot be maintained in Oklahoma.

“Since 2019, our appropriations have gone from about $8 billion to over $12 billion, so I’m not afraid to invest in certain things,” Stitt said. “But we cannot continue to increase spending … over the next six years by another 50 percent.”

He said tax cuts benefit working Oklahomans, grow the economy, and restrain the growth of government.

“Every time we’ve cut taxes, we’ve seen our revenue actually increase,” Stitt said. “And so what people don’t realize is when we give money back to the taxpayer, the money doesn’t disappear. It just stays in the citizens’ pockets. And I believe that they can spend their money better than the government can.”

Ray Carter Director, Center for Independent Journalism

Ray Carter

Director, Center for Independent Journalism

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