Oklahoma income tax is separate from federal income tax and is paid directly to the state in order to fund most public services within the state.
Each state has the authority to impose whichever type of tax they so choose, unless the assessment is expressly forbidden by the United States Constitution or the state’s own constitution. Where does the Sooner State receive its tax revenue? Let’s look at some Oklahoma tax statistics for a better understanding:
Overview of Oklahoma State Taxes
Oklahoma State Taxes: Quick Facts
Income tax 0.5% - 5%
Sales tax: 4.5 - 11.5%
Property tax: 0.74%
The U.S. States have the right to impose their own taxes on residents and non-residents with nexus to the state tax Oklahoma charges on top of the nationwide federal tax. Although the government grants money to the states, additional revenues are required to fund state services such as education, law enforcement, local government operations, and infrastructure, among others.
Annual 2019 Tax Burden ($75,000/yr income)
Total Estimated Tax Burden
Remaining Income = $62,070
As a result, some states are considered to be more tax-friendly than others. Based on a survey compiled of U.S. State tax collections, Oklahoma ranks #47 for most state taxes collected per capita. The survey also indicated that Oklahomans pay an average of $3,458 in taxes each year.
The statewide sales tax rate in Oklahoma is a minimum of 4.5%.
Consumers can check to see the rate of Oklahoma sales tax charged by county and city.
To estimate the amount of use tax you might owe, you can fill out an Oklahoma tax calculator worksheet, or you can save yourself the time and headache by enlisting the help of a Community Tax pro.
What is Oklahoma Use Tax?
Oklahoma use tax is an excise tax levied on goods purchased outside the state, where there is a lower sales tax rate imposed or where no sales taxes are charged. This includes goods purchased on the internet where no sales tax was charged, or goods purchased while traveling.
For example, if an Oklahoma resident travels to a state such as Montana where no sales taxis imposed, any goods purchased in Montana would be subject to use tax equivalent to the Oklahoma state tax rate.
For taxpayers who purchase goods in states with a lower sales tax rate, use tax would be owed for the difference in the amount paid in the other state and the Oklahoma income tax rate.
Oklahoma Excise Taxes
In addition to personal income and sales and use taxes, the state of Oklahoma charges additional taxes on certain goods sold within the state. These taxes are known as excise taxes.
Some items Oklahoma imposes excise taxes on include:
Taxes that pose health or societal risks (such as alcohol and tobacco) are generally subject to state sin tax. These taxes are typically charged to the vendor or manufacturer, but consumers often incur the cost of sin taxes at their point of purchase.
Oklahoma State Property Tax
Homeowners in the state of Oklahoma enjoy some of the lowest average property taxes in the country, with only six other states enjoying a lower median rate.
Here are a few other facts about Oklahoma state property taxes to help you learn more about what to expect as a property owner in the Sooner State.
The median property tax in Oklahoma is $796 per year
Counties in Oklahoma collect an average of 0.74% of the property’s fair market value of taxed each year
Oklahoma has the 6th lowest property tax rate in the country
The property tax levied in Oklahoma depends on the country in which you live.
In some cases, certain Oklahoma taxpayers may receive a reduction or total exemption of the amount of property taxes paid.
Residents of Oklahoma are not subject to an inheritance or estate tax.
Oklahoma State Tax Credits
The state of Oklahoma offers a number of credits to help its residents reduce their tax burden. Here are a few tax credits you may qualify as a taxpayer in Oklahoma:
Oklahoma Child Care/Child Tax Credit
For taxpayers with federal adjusted gross income of $100,000 or less, you may be eligible to take a credit for the greater of 5% of the federal child tax credit or 20% of the credit for child and dependent care expenses. This a non-refundable credit. If you qualified for the federal tax credit, you are automatically eligible for the credit in Oklahoma.
Oklahoma Earned Income Credit
Qualified Oklahoma taxpayers may take a credit in the amount of 5% of the federal Earned Income credit on the state return. This credit is non-refundable for Oklahoma taxpayers.
Oklahoma Natural Disaster Tax Credit
If you live in an area where a Presidential Major Disaster declaration was issued and your primary residence was damaged or destroyed, you may be eligible for a credit.
The credit would be allowed for the difference in the amount of property taxes paid before the damage occurred and the amount paid in the first year following the time in which the home was repaired or rebuilt.
This is a refundable credit and taxpayers who qualify are allowed to take the credit for up to five consecutive years. After the first year of the credit, the amount of the credit is 80% of the amount taken in the previous year.
Oklahoma State Tax Exemptions and Deductions
While tax credits reduce your tax liability dollar for dollar, a tax deduction reduces your taxable income, prior to calculating any taxes owed.
Standard Deduction on Oklahoma Taxes
For taxpayers who do not itemize their deductions on their Oklahoma return, they are allowed to take the standard deduction to reduce their income as follows:
Discover more deductions - speak to a tax pro today!
Taxpayers who itemized their deductions on their federal tax returns are also allowed to itemize their deductions on their state return.
Oklahoma 529 Plan Contributions Deduction
Oklahoma residents who make contributions to an Oklahoma 529 savings plan or to the OklahomaDream 529 may deduct up to $10,000 per year on their Oklahoma resident tax returns. The amount is $20,000 for taxpayers who are married and filing a joint return.
If you contribute more than the $10,000 (or $20,000) in a given taxable year, the excess deduction may be carried forward to offset income for five years.
Oklahoma Foster Care Deduction
For taxpayers who work with qualified foster care agencies, you can deduct $5,000 of the number of expenses incurred in caring for children in your home. The amount is limited to up to $2,500 for those who are single or married and filing a separate tax return.
Oklahoma Retirement Income Exclusion
The state of Oklahoma excludes certain types of retirement income from gross income in the state.
Social security benefits included in federal income
Federal Civil Service Retirement benefits
Oklahoma state civil service retirement benefits
Other retirement benefits that were included in federal adjusted gross income up to $10,000. Taxpayers must be age 65 or older in order to claim this deduction
Oklahoma Military Income Exclusion
Veterans in the state of Oklahoma who receive military retirement benefits are eligible to take a deduction of $10,000 or up to 75% of the benefits received, whichever is greater. The amount that is deducted on the Oklahoma tax return cannot exceed the amount of income included in federal adjusted gross income.
The surviving spouse of a service member who was killed while serving in a combat zone may exclude from income any payments received from the Department of Defense in the taxable year in which their spouse was killed.
Oklahoma Estimated Taxes
If you’re required to pay estimated taxes, the IRS and state of Oklahoma have the same filing deadlines in order to submit your estimated tax payments.
First-quarter payment: Due April 15th
Second-quarter payment: Due June 15th
Third-quarter payment: Due September 15th
Fourth-quarter payment: Due January 15th of the following year
Calculating Your Oklahoma Tax Refund
Filing taxes in the state of Oklahoma can be complicated. In order to ensure the most accurate filing and achieve the maximum refund allowed, consider consulting an expert to assist you.
The experts at Community Tax may be able to find you additional credits and deductions that you were unaware of. Our goal is to help to make sure that you keep as much of your hard-earned money as possible.
How to Pay Oklahoma State Taxes
The state of Oklahoma accepts payments for taxes owed via mail, electronically or by phone
Online (www.tax.ok.gov) – You can pay your state taxes online in two ways:
Electronic Bank Draft (E-Check) – You may pay your taxes with your checking or savings account. The state of Oklahoma does not charge a fee in order to take advantage of this service.
Credit or Debit cards – You may pay your taxes with a debit or credit card. The amount of the convenience fees paid to the credit card processor is dependent on the amount of the taxes owed.
Mail - The Oklahoma Tax Commission also accepts payment via the mail. Payment is accepted via check or money order.
If you are unable to pay your Oklahoma state taxes at the time of filing your return, you may set up a payment plan. This can occur once your tax return has been processed. The state provides you with three separate bills, which detail the amount of tax, interest, and penalty due, plus the minimum amount to be paid with each bill.
You may also set up a payment plan online via the Oklahoma Tax Commission’s website. You will need to Letter ID from one of the bills the Tax Commission sends in order to set up the plan.
Phone - You may make your tax payments by phone by calling 1-800-272-9829. If you pay via credit card, a convenience fee is charged based on the total amount of the taxes being paid.
Oklahoma Tax Facts
Oklahoma is the 40th ranked economy in the United States
The Oklahoma economy is most well-known for its influence in the oil and natural gas industries.
Summary of Federal Taxes
In addition to your Oklahoma state tax liabilities, you are also subject to pay taxes on a federal level. To efficiently calculate your federal taxes, use our federal income tax calculator.
Call us to stress less and save more on your federal tax refund.
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