Oklahoma Tax Guide 2026

Personal income tax

68 O.S. §2355 establishes 6 brackets (single): • 0.25% on first $1,000 • 0.75% from $1,000 to $2,500 • 1.75% from $2,500 to $3,750 • 2.75% from $3,750 to $4,900 • 3.75% from $4,900 to $7,200 • 4.75% above $7,200 (top rate) MFJ brackets approximately doubled. The top rate of 4.75% applies starting at quite a low income level ($7,200 single) — meaning nearly all working-age filers reach the 4.75% bracket. Combined with no marriage adjustment in lower brackets, the structure functions close to a flat 4.75% for middle and upper incomes. HB 2962 of 2022 reduced the top rate from 5% to 4.75% effective 2022 and also reduced corporate rate to 4%. Standard deduction: $6,350 single / $12,700 MFJ (Oklahoma uses its OWN standard deduction, not federal — significantly lower than federal SD of $15k/$30k). Personal exemption: $1,000 per person. No state QBI deduction (Oklahoma adds back the federal §199A). No state AMT. Social Security: 100% EXEMPT from OK income tax (68 O.S. §2358(A)).

Qualifying capital gains deduction — favorable for in-state owners

68 O.S. §2358(D) provides a 100% DEDUCTION (not exclusion or rate preference — full deduction from OK taxable income) for net capital gain from sale of: 1. Real property located in OK held > 5 years 2. Tangible personal property used in OK business held > 5 years 3. Stock or ownership interest in an OK-HEADQUARTERED company, OR an OK pass-through entity with primary operations in OK, held > 2 years 4. Sale of intangible personal property (patents, copyrights) acquired/used in OK held > 5 years Effective rate on qualifying OK-source LTCG: 0% — a powerful incentive for in-state founders and long-hold real estate investors. Non-OK-source gains and short-term gains: taxed at ordinary brackets (top 4.75%). This deduction makes OK one of the most favorable states for founders selling OK-headquartered companies — comparable to Arkansas's 50% LTCG exclusion or South Carolina's 44%.

Sales tax — among the highest combined

State rate 4.5% (68 O.S. §1354). Counties (up to 2%) and cities (up to 6.5%) can add local sales tax — combined average 8.99% (second-highest in US after Louisiana's 9.55%). Notable cities: • Oklahoma City: 8.625% combined • Tulsa: 8.517% • Norman: 8.75% • Edmond: 9.0% • Lawton: 9.5% • Stillwater: 9.0625% • Some smaller cities reach 11% combined (highest single-jurisdiction in US) Groceries: TAXED at 4.5% state rate — Oklahoma was one of the last states to fully tax groceries until HB 1955 of 2024 ELIMINATED the state portion of grocery tax effective August 29, 2024. Local portion (up to 6.5% city/county) still applies. Net post-2024: groceries are taxed at LOCAL ONLY (typically 4%–5% combined in cities). Prescription drugs: exempt. Clothing: taxable. Services: largely exempt. Economic nexus (68 O.S. §1392): $100,000 in cumulative sales.

Property tax and business considerations

Statewide average effective ~0.89%. Oklahoma County (OKC): ~0.92%, Tulsa: ~1.06%, Cleveland (Norman): ~0.97%, Comanche (Lawton): ~0.99%. Oklahoma uses fractional assessment: 11%–13.5% of fair cash value (varies by county, locked by Oklahoma Const. Art. X §8). Homestead Exemption: $1,000 reduction in assessed value (modest dollar value). Additional Homestead Exemption (low-income elderly): full additional homestead exemption for senior/disabled with household income < ~$30,000. Property Tax Refund: refundable credit for elderly/disabled with income < ~$12,000. Property tax assessment 'cap': owner-occupied homestead increases capped at 3% per year; non-homestead at 5% (under SQ 758 of 2012, OK Const. Art. X §8B). Corporate income tax: 4% flat (reduced from 6% via HB 2962 of 2022). No franchise tax (repealed effective 2022). LLC fee: $25 annual report (18 O.S. §2055.2). Among the lowest in US. Apportionment: single-sales factor for most industries. PTET: Available under HB 2665 of 2019 — entity-level election at top individual rate (4.75%); refundable credit to owners. No estate, inheritance, or gift tax (estate tax repealed 2010). Unemployment tax: 0.10%–5.5% on $27,000 wage base. Oil & gas gross production tax: 5% on most production; reduced rates for incentivized horizontal wells (in effect first 36 months).

Oil and gas considerations

Gross Production Tax (68 O.S. §1001 et seq.): 5% on the value of oil and gas at the wellhead. Incentives: enhanced recovery wells and certain horizontal/Marcellus-equivalent wells get reduced rates (2% for first 36 months in some cases). Oil and gas royalties received by Oklahoma residents are taxed as ordinary income at OK brackets (top 4.75%) but qualify for federal depletion deduction (15% statutory). Oklahoma's oil/gas industry generates ~30%+ of state tax revenue indirectly (income tax on industry wages and royalties + gross production tax + sales tax on equipment and consumer spending in oil-belt communities). Oil price volatility produces meaningful revenue swings — Oklahoma maintains a Rainy Day Fund and constitutional 5% Reserve Fund (OK Const. Art. X §23) to buffer.

Worked example: Bobby Joe Maldonado, Tulsa-based independent oil-field welder (single, 2026)

Bobby Joe operates a single-member LLC providing welding services to Oklahoma oil/gas operators. Net SE income $135,000. Owns a $235,000 Tulsa home (homestead).

Federal: SE tax + federal income tax + §199A 20% QBI (welding services, non-SSTB → full QBI). Oklahoma: Federal AGI (after half-SE): ~$125,500 Less OK standard deduction: $6,350 Less personal exemption ($1,000): $1,000 Less federal QBI add-back: +$27,000 (OK doesn't allow QBI; adds back what was deducted federally) Actually OK requires add-back of federal QBI deduction, so use unreduced figure OK taxable: $125,500 − $6,350 − $1,000 = $118,150 Tax (2026 brackets, single): First $1,000 × 0.25% = $2.50 Next $1,500 × 0.75% = $11.25 Next $1,250 × 1.75% = $21.88 Next $1,150 × 2.75% = $31.63 Next $2,300 × 3.75% = $86.25 Above $7,200 ($110,950) × 4.75% = $5,270.13 Total: ~$5,423 Property tax on $235k Tulsa home (assessed at 11% = $25,850) × ~106 mills = ~$2,740/yr; less $1,000 homestead exemption × ~10.6 mills = $106 reduction → net $2,634/yr. Sales tax in Tulsa: 8.517% on non-grocery purchases; ~4.017% local on groceries (post 2024 state grocery repeal). Oklahoma total annual state income tax: $5,423 — competitive with neighboring Arkansas (3.9% flat) and lower than Kansas (5.58% top).

Statute references

• Personal income tax (6-bracket, top 4.75%) — 68 O.S. §2355 (HB 2962 of 2022)
• Qualifying capital gains 100% deduction — 68 O.S. §2358(D)
• Social Security exemption — 68 O.S. §2358(A)
• Sales tax 4.5% — 68 O.S. §1354
• Economic nexus (Wayfair) — 68 O.S. §1392
• Corporate income tax 4% — 68 O.S. §2355(B)
• Property assessment cap — Okla. Const. Art. X §8B
• PTET election — HB 2665 of 2019
• Gross Production Tax (oil/gas) — 68 O.S. §1001 et seq.

Related pages

• State Tax Comparison →
• Capital Gains Tax →
• QBI §199A Deduction →