Oklahoma governor signs income tax cut deal: What to know

Yahoo

29-05-2025

Republican Gov. Kevin Stitt has signed an income tax cut into law, accomplishing his main goal of the legislative session with days to spare.
The quarter-point cut will reduce Oklahoma's income tax rate to 4.5% for most earners, while costing the state between $160 million and $300 million a year in lost revenue, according to varying estimates.
Stitt has long pressed for reducing income taxes and reached a deal this year with the Republican-led Legislature to make it happen. The agreement includes a consolidation of income tax brackets and what Stitt has described as a "path to zero" income tax, with triggers meant to further reduce the tax rate in future years.
While Stitt had opened the Legislative session in February by calling for a steeper half-point tax cut, he has still seemed pleased with landing a quarter-point cut.
Talking about the tax cut deal during a news conference on Wednesday, May 28, Stitt said it would "automatically trigger tax cuts, not in an irresponsible way, but with excess revenue, we'll be able to trigger tax cuts and put us on a path to zero."
The specifics of the cut are spelled out in House Bill 2764, which Stitt signed on Wednesday. By law, the Legislature has until Friday to finish its regular session business.
Critics have questioned whether lawmakers should reduce tax collections — and also dip into savings to cover some line items in the state's nearly $12.6 billion budget for the next fiscal year — at a time of economic uncertainty.
More: Gov. Stitt, legislative leaders announce budget deal including tax cuts, tort reforms
According to an analysis by the Oklahoma Policy Institute, a nonpartisan Tulsa-based think tank, cutting income taxes by a quarter of a percentage point would reduce state revenues by $306 million annually.
The group's analysis also showed many Oklahomans stand to save only marginal amount on their annual income tax bill. A quarter-point cut could save people who make $79,700 or less between $9 and $95, and would save those in the top 1% of incomes — making $683,500 or more — $2,936 annually, the group found.
Stitt has said the cut will help out struggling families and cost the state about $160 million in lost revenue during the next fiscal year, citing Oklahoma Tax Commission numbers. Stitt has maintained because that money is spent by taxpayers, not state government, it's better for the economy.
The tax cut bill passed by margins of 74-19 in the House and 34-11 in the Senate, largely along party lines.
This article originally appeared on Oklahoman: Oklahoma Gov. Stitt signs income tax cut bill: What you should know