Fact Check: The impact of a .25-percent income tax cut to Oklahoma taxpayers

Proposal

The governor has proposed an across-the-board .25-percent cut to the state’s personal income tax.
This proposal will be the focus on a legislative special session on Monday, Jan. 29.

How this impacts Oklahomans

The Institute on Taxation and Economic Policy has estimate how much this would cut taxes for Oklahomans by income level:

A .25-percent cut to Oklahoma’s personal income tax would provide little relief to everyday Oklahomans who need it most

2024 Income	Bottom 20%	Second 20%	Third 20%	Fourth 20%	Next 15%	Next 4%	Top 1%
Income Range Start	Below	$23,900	$44,000	$74,900	$128,900	$246,500	$619,000
Income Range End	$23,900	$44,000	$74,900	$128,900	$246,500	$619,000	and above
Average Tax Cut (annual)	$19	$48	$92	$168	$311	$624	$2,634
Source: Institute for Taxation and Economic Policy

How much state revenue is lost with a .25-percent cut to personal income tax

A .25-percent cut to Oklahoma’s personal income tax cut has been estimated by legislative researchers to cost the state between $235 million and $293 million annually when fully implemented.

Background

Oklahoma lawmakers have cut the state’s personal income tax nine times in the last 20 years bringing it down from 7% in 2002 to 4.75% today.
When adjusted for inflation and population growth, the current year state budget is 12% smaller than it was two decades ago. [FY 2024 Budget Highlights]
Oklahoma also has the nation’s highest threshold for raising new revenue (State Question 640).
- As a result, Oklahoma lawmakers have voted to raise new revenue only once since 1992.
The Legislative Office of Fiscal Transparency in January released a budget stress test report showing Oklahoma is financially unprepared for anything more than a mild economic downturn.

Additional resources

ABOUT THE AUTHOR

David Hamby has more than 25 years of experience as an award-winning communicator, including overseeing communication programs for Oklahoma higher education institutions and other organizations. Before joining OK Policy, he was director of public relations for Rogers State University where he managed the school’s external communication programs and served as a member of the president’s leadership team. He served in a similar communications role for five years at the University of Tulsa. He also has worked in communications roles at Oklahoma State University and the Fort Smith Chamber of Commerce in Arkansas. He joined OK Policy in October 2019.