The individual income tax is Oklahoma’s largest single revenue source for state government. Oklahoma first levied an income tax in 1915. The top income tax rate has been cut repeatedly since the late 1990s, and most recently was lowered to 4.75 percent as of 2022. Oklahoma has a graduated income tax, with multiple tax brackets; however, the top rate applies to all taxable income above just $7,200 for an individual or $12,200 for a married couple filing jointly or single head of household. Numerous deductions and credits can reduce state taxable income, including the standard deduction, personal exemption, earned income tax credit, child tax credit, and others.
The individual income tax is paid to the state in annual or quarterly payments or in withholdings from wages and other payments. Taxpayers file a return in April to settle the tax liability or credit for the previous year.
Currently, the lion’s share of individual income tax collections (85.41 percent in FY 2023) are apportioned to the General Revenue Fund, with the remainder divided between the 1017 Fund (8.34 percent), the Teachers’ Retirement Fund (5.25 percent) and the Ad Valorem Reimbursement Fund (1.00 percent).
Individual income tax collections totaled $3.547 billion in FY 2021, accounting for 37 percent of total state tax revenue.