Budget & Taxes

HB 2740 amends Oklahoma's individual income tax structure for tax years beginning January 1, 2026. It reduces the top marginal tax rate from 5.50% to 4.75% for all taxable income above specific thresholds, applying to both single filers and married couples filing jointly. The bill establishes new, lower tax brackets: for example, single filers pay 0.25% on the first $1,000, 0.75% on the next $1,500, and 4.75% on all remaining income. This change affects all Oklahoma residents and nonresidents filing state income tax returns, with no federal tax deduction allowed.

HB 2742 clarifies and updates definitions related to Oklahoma's cigarette and heated tobacco product excise tax system. It defines "cigarette" to explicitly include heated tobacco products and creates new rules for "delivery sales" (such as online or mail orders to consumers). The bill affects cigarette manufacturers, wholesalers, retailers, and online sellers by specifying tax obligations for these transactions. Key provisions include redefining terms like "wholesaler," "retailer," and "delivery sale," and clarifying tax exemptions for sales to veterans hospitals, the U.S. government, and other specific entities. This is a procedural tax administration bill, not a new tax rate change.

HB 2219, the "Crossroads Sound and Screen Act," creates tax rebates for music production companies that create content in Oklahoma. It offers tiered rebates (10-25% of facility costs, plus up to 14% more for Oklahoma-based talent or local work) with a $500,000 maximum per project and a $10 million annual spending cap. To qualify, companies must meet requirements like paying Oklahoma crews, carrying insurance, and participating in promotional activities. The program is administered by the Oklahoma Department of Commerce and Tax Commission using a dedicated revolving fund.

HB 2841 amends Oklahoma's management rules for the Tobacco Settlement Endowment Trust Fund, directly affecting the fund and its Board of Investors. It requires the Board to invest fund assets using "prudent person" standards, diversify investments to minimize risk, and hire investment managers through competitive bidding. The bill mandates that at least 2% of the fund's principal balance or $40 million (whichever is greater) must be spent annually on grant and incentive programs. The changes take effect July 1, 2025.