January 13, 2015

Oklahoma

State & Local Taxes in 2015

 

Oklahoma Tax Code Features

Progressive Features

• Provides a 5 percent refundable Earned Income Tax Credit (EITC)

• Provides a refundable tax credit to reduce the impact of its sales tax on groceries

Regressive Features

• Provides an income tax deduction for state income taxes paid

• Fails to index income tax brackets to inflation

• State sales tax base includes groceries

• Local sales tax bases include groceries

• Comparatively high combined state and local sales tax rate

• Fails to provide a property tax “circuit breaker” credit for low-income non-elderly taxpayers

Tax Changes Enacted in 2013 & 2014

• Enacted law that could eventually reduce top personal income tax rate from 5.25 to 4.85 percent, dependent on state revenue growth

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, Oklahoma has the 16th most unfair state and local tax system in the country. States with regressive tax structures have negative tax inequality indexes, meaning that incomes are less equal in those states after state and local taxes than before (See Ap­pendix B for state-by-state rankings and more details).

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