Oklahoma sets new income tax rates for individuals and couples starting 2028

Oklahoma's Senate Bill 308, introduced on February 4, 2025, aims to reform the state's income tax structure, significantly impacting residents' financial obligations. The bill proposes a tiered tax system that adjusts the income thresholds for taxation, effectively lowering the tax burden for many Oklahomans.

Under the new provisions, single individuals and married individuals filing separately will see a 0.00% tax rate on the first $4,900 of taxable income, followed by a 0.75% tax on the next $2,300, and a 1.75% tax on any income above that. For married couples filing jointly, the initial tax-free threshold increases to $9,800, with similar incremental rates applied thereafter. Notably, the bill eliminates the deduction for federal income taxes paid, which could affect taxpayers' overall liabilities.

The introduction of this bill has sparked considerable debate among lawmakers and constituents. Proponents argue that the changes will provide much-needed relief to low- and middle-income families, potentially stimulating local economies through increased disposable income. Critics, however, express concerns about the long-term implications for state revenue, fearing that reduced tax rates could lead to budget shortfalls impacting essential services.

The economic implications of Senate Bill 308 are significant. By adjusting tax rates and thresholds, the bill seeks to enhance the financial well-being of many residents, which could lead to increased consumer spending. However, the potential reduction in state revenue raises questions about funding for public services, including education and infrastructure.

As the bill progresses through the legislative process, its future remains uncertain. Experts suggest that ongoing discussions will likely focus on balancing tax relief with the need to maintain adequate funding for state programs. The outcome of Senate Bill 308 could set a precedent for future tax reforms in Oklahoma, making it a critical issue for both lawmakers and the public.