Something we often hear about Oklahoma’s tax system is that the top rate kicks in so low that it affects almost everyone. Most recently, a Tulsa World article stated:

The current comparable top rate is 5.25 percent, which kicks on net income over $15,000 a year.  That’s correct: The state’s top tax bracket – and there are six other lower tax brackets – kicks in at $15,000 a year, about $80 a year less than the gross earning of someone working full time at the U.S. minimum wage.

Actually, that’s incorrect. It leaves out two major components of our tax system: the standard deduction and personal exemption. Because of the standard deduction, the first $5,800 of income for singles and $11,600 for married couples is not taxed. The personal exemption means an additional $1,000 for each person in the household is not taxed. Read the rest of this entry »

An interesting new report from our friends at the Center on Budget and Policy Priorities looks at whether families with income below the federal poverty level (FPL) in each state are subject to state income taxes. It finds that for Oklahoma, the threshold at which a two-parent family with two children owes state income tax made it above the federal poverty line for the first time in 2008. The income tax threshold for a two-parent family of four was $23,500 in 2008, which is 107 percent of the FPL of $22,017. The report shows that back in 2000, the state’s income tax threshold for a family of four was several thousand dollars below the poverty line. Read the rest of this entry »