Sales Tax Relief Credit

The Sales Tax Relief Credit is an income tax credit that provides a rebate of $40 per household member to households with incomes at or below the following levels:

• $50,000 per year for filers who are elderly, have a physical disability, or claim a dependent; or
• $20,000 per year for everyone else.

The credit was first enacted in 1990 as part of the legislative compromise that led to the passage of House Bill 1017 and was intended to offset the sales tax on groceries for low-income households. Eligibility for the credit was expanded in 1998 but the amount has remained frozen at $40. The credit is refundable, meaning that it can be claimed in an amount that exceeds a taxpayer’s income tax liability.

The credit was claimed by 357,684 households in Tax Year 2022 for a total of $28.6 million, according to the Oklahoma Tax Commission’s 2023-24 Tax Expenditure Report.  A total of 715,457 individuals received the credit in 2022, or roughly one-sixth of the state’s population. Over time, the number of recipients of the sales tax relief credit has been steadily declining, as incomes rose while eligibility for the credit remained flat. There  were nearly 165,000 fewer households that received the credit in 2022 compared to 2010 (520,476).