The Oklahoma House of Representatives overwhelmingly approved a landmark income tax reform bill that will gradually eliminate the state income tax. House Bill 3635, sponsored by Rep. Mark Lepak, was passed by a 73-19 margin Wednesday evening.

The legislation flattens Oklahoma’s many existing income tax brackets, provides an elevated standard deduction for lower-to-moderate income earners, and cuts the income tax each time revenues grow by more than 5%. The result is that the income tax goes down as the state takes in more money, returning the hard-earned tax dollars of families and small businesses, rather than growing government. The bill puts Oklahoma on the path to income tax elimination, and now heads to the Senate.

“States that put taxpaying families and businesses first are moving to lower, flatten, and then eliminate income taxes. With their overwhelming approval of House Bill 3635, the House said Oklahoma will move to the top of the list when it comes to being one of the best state tax environments in the country,” said Americans for Tax Reform President Grover Norquist. “Reducing and eliminating the state  income tax lets Oklahomans keep more of their hard-earned money,  and will attract investment and jobs to Oklahoma.”

Last year, Oklahoma drew in a $282 million budget surplus. The state has the means to ensure Oklahomans keep the money they rightfully earned by flattening, lowering, and eventually eliminating the state’s personal income tax. The state trimmed income taxes last session, and cut the corporate rate by 2%.

Governor Kevin Stitt lent his support for continued reform in his State of the State address, calling for a “Taxpayer Protection Plan” to reduce taxes and the state economy grows.

Norquist added, “Congratulations to lead sponsor Representative Lepak, and credit to Speaker McCall and the House for prioritizing tax reform that will make Oklahoma more attractive to new investment and families leaving high-tax states. This is a huge step for Oklahoma, and we look forward to the Senate lending their views and support on this issue.”

Last year, 14 states cut taxes. New Hampshire and Louisiana set a path to become the 9th and 10th states with no income tax. In the region, Texas already has no income tax, and Arizona is moving to a nationwide low 2.5% flat tax (with the intent to eliminate its income tax). With more mobility due to the pandemic and work-from-home options, states are competing beyond their regions as well.

More states are working on conservative tax reform this session, and Oklahoma is stepping up to the plate with the advancement of HB 3635.