OKLAHOMA CITY –
State leaders rolled out the Fiscal Year 2026 budget, which includes an income tax cut. Republican leaders did not originally see eye-to-eye on the logistics of the cut, but did come to a compromise.
What tax cut did lawmakers agree on?
State lawmakers agreed to eliminate the bottom three of the six total tax brackets. The remaining top three brackets will get a .25% cut to their income tax annually.
How much money will the state income tax cut save you?
Senate Minority Leader Julia Kirt shared with reporters during a media availability what the tax cut is expected to save Oklahomans:
- Lowest Bracket
- Making $12 an hour or less
- Income tax cut is expected save $21 a year
- Middle Bracket
- Making $60,000 – $65,000 annually
- Income tax cut is expected save $143 a year
- Top Bracket
- Making $683,000+ a year
- Income tax cut is expected save $3,000+ a year
How much will this cost the state?
For next year, lawmakers have to account for January to June, along with a full 12 months of costs. For that reason, the immediate cost to the state will be $300 million, and lawmakers expect the cut to cost $240 million annually each year after that.
What is next in the process of getting this tax cut finalized?
State lawmakers will begin drafting the budget bills. That legislation will follow the same procedure as other bills, first going through committee and then being voted on by the full floor in both chambers.
The Joint Committee on Appropriations and Budget, or JCAB, is expected to begin meeting on Monday to go through the final details of the budget. The Senate is expected to hear the budget bill on the floor on Tuesday, and the House is expected to hear it on Thursday.
What is still being negotiated?
The main portion that is still being negotiated is the “path” to zero income tax.
The governor has been calling for the “path,” which would trigger additional tax cuts based on revenue. Lawmakers are still working to determine what revenue numbers they are comfortable with as triggers.
