Corporate Income Tax, What's That?
Oklahoma’s corporate income tax is set at a flat rate of 6 percent of taxable income. The tax is based on a three-part formula that looks at the portions of a company’s sales, property and payroll that is based in Oklahoma.
The corporate income tax generated $443 million in fiscal year 2012, which was 5.3 percent of total state tax collections. The corporate income tax tends to be, along with the gross production tax, one of the state’s most volatile tax sources, fluctuating dramatically from year to year and often coming in far above or below certified estimates. This volatility has been explained by changes in corporate tax laws, the use of corporate tax breaks, and the outsized impact that a small number of corporations can have on total collections.
The corporate income tax has generated a declining share of total tax revenue over time as more businesses incorporate as S-Corps and LLCs (which report their income on the personal income tax return of shareholders) and as companies find ways to take advantage of loopholes and tax breaks to limit their corporate tax liability.