Oklahoma’s fiscal 2022 budget agreement calls for lower personal and corporate income tax rates and additional tax relief.
Gov. Kevin Stitt (R) and the Legislature reached the $8.3 billion budget agreement May 13. The budget calls for reducing the top personal income tax rate to 4.75 percent from 5 percent and the corporate income tax rate to 4 percent from 6 percent, according to a release the same day.
The budget will need to be approved by the Legislature, which is set to adjourn by a constitutionally set deadline of 5 p.m. on May 28.
The tax reductions would place both rates in the “Top 10 for lowest rates in the country of states that levy those types of taxes,” according to the release.
The personal income tax rate reduction would result in a loss of about $170 million in revenue for the full year after enactment and the corporate income tax rate cut would result in a loss of about $110 million for the full year after enactment, Senate Appropriations Chair Roger Thompson (R) said during an announcement the same day.
“This is going to help us retain corporations here in Oklahoma and also attract new corporate headquarters to the great state of Oklahoma,” Stitt said.
The budget would also create a new film tax incentive with a $30 million cap to recruit more film industry projects.
Taxes for working families would also be lowered by restoring the earned income tax credit, Stitt said during the announcement.
The budget would provide $42 million in tax incentives for broadband providers to expand into currently unserved or underserved areas, as well.
The budget agreement would also restore a historic sales tax credit that would allow OU Health — a combined effort of the University of Oklahoma Health Sciences Center and OU Medicine Inc. hospitals — “to train 160 additional nursing graduates and nurse practitioners annually and 70 additional medical residents within three years,” according to the release.
“This budget not only protects core services and programs for the next fiscal year, it will stimulate our economy in a variety of ways. I am excited to see personal income tax cuts and new economic development funding to recruit more jobs for Oklahomans,” House Appropriations and Budget Chair Kevin Wallace (R) said in the release.
The budget would spend $8.3 billion of the $9.6 billion in revenue that in February the state's Board of Equalization certified is available for appropriations, according to the release. The remaining $1.3 billion would be allotted to tax relief, refilling reserves, or replenishing funding that was temporarily directed toward pandemic relief.
The budget would increase reserves to $1 billion from less than $300 million currently, approaching the high-water mark in reserves held by the state pre-pandemic.
According to the release, the Joint Committee on Appropriations and Budget will begin processing legislation comprising the agreement in the coming days. H.B. 2900 will be the general appropriations bill, according to the release.
Stitt’s office did not respond to a request for comment by press time.