During the special session called by Governor Stitt to address much needed tax relief for Oklahomans, the state House of Representatives has passed eight bills directed at cutting taxes.
The House has passed a permanent income tax reduction from 4.75% to 4.5% (HB 1009) which would go into effect at the beginning of the 2023 tax year, as well as a temporary version of the bill (HB 1008), which would go into effect at the beginning of the 2022 tax year. The House also passed a two-year increase of the sales tax relief credit from $40 to $200 (HB 1011), beginning in the 2022 tax year.
Furthermore, the House focused on cutting costs for Oklahomans at the grocery store, passing numerous bills aimed at reducing the sales tax on groceries. These bills include two-year state grocery tax moratoriums, one version with restrictions on local level changes (HB 1013), and one without restriction (HB 1012). The House passed two bills to permanently remove the state grocery sales tax, again, one version has no local restrictions on local changes (HB 1014), and one with restriction (HB 1015). These restrictions would not allow local governments to change their sales tax on groceries for a period of time.
Not every bill brought to the House floor has passed. In that list are a bigger personal income tax reduction, dropping the rate from 4.75% to 4.25% (HB 1010), and two bills that would permanently remove state and local grocery tax, HB 1016 and HB 1017, both broader reaching versions of HB 1014 and HB 1015.
Also not passed was a bill that would phaseout the corporate income tax over the next eight years (HB 1021), a bill that would suspend the franchise tax (HB 1022), and two inflation relief funding budget adjustments bills (HB 1018 and HB 1019).
Of the bills passed, HB 1015 was the most aggressive grocery sales tax reform. The bill eliminates the grocery tax and prevents localities from applying taxes on groceries for a period of time, as Oklahoma is one of only seven states that taxes grocery staples at a full tax rate. Another bill that would seriously help Oklahomans is HB 1009, which would permanently cut the income tax rate by .25%. Although this still lags states who are flattening, reducing, and eliminating their income taxes, this would still be a welcomed move in the right direction. Especially since the state’s top rate of 4.75% applies to individuals with an extremely low-income level of just $7,200 and is one of only 13 states that does not index income tax for inflation.
Despite this call for serious tax relief by the governor, the heavily Republican-controlled Senate has still yet to act on any of the bills sent to them by the House. With both inflation and the price of fossil fuels remaining at high levels, now more than ever is the time for the state Senate to act on these meaningful tax relief bills and protect the pocketbooks of their constituents.
During his State of the State Address, Gov. Stitt called for gradual income tax elimination. A bill to eliminate the state income tax passed the House during session. Broader reforms should be the ultimate goal for the legislature.