Oklahoma cuts corporate and individual income tax rates
TAX ALERT |
Authored by RSM US LLP
On May 21, 2021, Oklahoma Gov. Kevin Stitt signed several bills (House Bill 2960, House Bill 2962 and House Bill 2963) that will lower the rates for both corporate and personal income taxes. The bills were part of the state’s fiscal year 2022 budget that was agreed to by the governor and the legislature earlier this month.
Under House Bill 2960, for tax years beginning Jan. 1, 2022, the corporate income tax rate is reduced to 4% from 6%. Oklahoma imposes a flat rate on all corporate income. Under House Bill 2962, the personal income tax rates in each of the state’s five brackets are reduced by 0.25% effective Jan. 1, 2022. The cuts will reduce the highest bracket’s rate from 5% to 4.75% and the lowest bracket’s rate from 0.5% to 0.25%. Finally, under House Bill 2963, the income tax rate for electing pass-through entities is reduced to 4% from 6%, also effective Jan. 1, 2022. Like the corporate tax, the pass-through entity tax is imposed on all income. The pass-through entity tax is only applicable to pass-through entities that elect to be taxed at the entity level.
Oklahoma businesses, both corporate and those operating through pass-through entities, should be aware of the new law as their tax burdens are likely to lessen. In addition, withholding requirements for Oklahoma based employees are likely to change. Individuals subject to Oklahoma personal income tax will also benefit from the new law.
Oklahoma is far from the first state in the Midwest to cut taxes this session. Iowa, Missouri, Montana and Nebraska have or likely will enact personal and corporate income taxes cuts. Oklahoma taxpayers with questions about the tax cuts should consult their state and local tax professional for more information.
Call us at +1 213.873.1700, email us at firstname.lastname@example.org or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by Mike Williams, David Brunori , Chris Gorman, Kathryn Rodano and originally appeared on 2021-05-25.
2020 RSM US LLP. All rights reserved.
The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Vasquez & Company LLP can assist you, please call +1 213.873.1700.
Subscribe to receive important updates from our Insights and Resources.