OKPOLICY.ORG
Contact: Dave Hamby (Oklahoma Policy Institute) dhamby@okpolicy.org or Jon Whiten (ITEP) jon@itep.org
Oklahoma lawmakers this year passed an income tax cut that, when fully implemented, will be one of the nation’s most significant income tax cuts for millionaires, according to a new analysis from the Institute on Taxation and Economic Policy (ITEP).
Gov. Kevin Stitt in May 2025 signed House Bill 2764, which immediately decreases the state’s top personal income tax rate from 4.75 to 4.5 percent and eliminates three of the state’s six tax brackets. After that, additional tax cuts will be triggered in future years if certain revenue requirements are met – until the personal income tax rate reaches zero.
“Oklahoma faces significant challenges as one of the nation’s poorest states, where nearly 1 in 5 of our children live in poverty,” said Aanahita Ervin, Fiscal Policy Analyst for the Oklahoma Policy Institute. “Despite enormous unmet needs, our lawmakers have chosen decades of tax cuts that favor the wealthy over targeted relief like a child tax credit that could reduce Oklahoma’s child poverty by 25 percent. It doesn’t have to be this way.”
Key Findings
- The tax cuts for millionaires in Oklahoma will cost $397 million a year for the most recent cut, and $5.77 billion annually once triggered tax cuts are fully phased in.
- When fully enacted and revenue from state income tax is eliminated, the average millionaire in Oklahoma will receive $133,000 in annual cuts – more than 53 times the average tax reduction for non-millionaires.
This upside-down benefit to Oklahoma’s wealthiest residents is contrary to public opinion that shows just 12 percent of Americans believe wealthy families are overtaxed.
Instead of delivering targeted tax relief to middle-income and low-income residents, Oklahoma lawmakers continue to advance tax policies that overwhelmingly benefit the richest residents. Meanwhile, at the federal level the new Trump tax law is projected to deliver $1 trillion in tax cuts to the top 1 percent nationwide over the next decade – including an average of $67,750 to Oklahoma’s top 1 percent in 2026 alone. Our state’s lawmakers have chosen to compound those benefits by cutting state income taxes to disproportionately benefit their wealthiest residents.
The benefits for Oklahoma’s wealthiest residents could even be higher than ITEP’s analysis here shows. The legislative language only affects the rate and appears to leave the state’s tax credits for modest income families in place, so ITEP’s analysis assumes they are retained. If those credits are eliminated with the rest of the income tax, the extremely wealthy would receive even more of the bill’s proceeds than what ITEP found in its report.
“These tax cuts are not only fiscally reckless but also deeply inequitable,” said Aidan Davis, ITEP’s State Policy Director. “At a time when state budgets are under immense pressure, it’s indefensible to hand millionaires five- and six-figure annual tax cuts while too many families are struggling to make ends meet.”
The ITEP report examines five states – including Oklahoma – that enacted tax cuts for millionaires in 2025. Together, these cuts will reduce state revenues by more than $800 million in 2026 and an estimated $2.2 billion a year across the five states once fully implemented. (The other four states are Mississippi, Kansas, Missouri, and Ohio.)
“These policies double down on inequality,” said Dylan Grundman O’Neill, ITEP Senior Analyst. “They prioritize millionaires while putting critical services like education, health care, and infrastructure at risk for everyone else.”
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About the Oklahoma Policy Institute
The Oklahoma Policy Institute seeks to create a more equitable Oklahoma through its nonpartisan policy research, analysis, and advocacy. OK Policy encourages critical conversations through data-driven research and outreach regarding state policy so that every Oklahoman has equitable opportunities to thrive.
About ITEP
The Institute on Taxation and Economic Policy (ITEP) is a nonpartisan think tank that conducts research on federal, state, and local tax policies, emphasizing equity, sustainability, and fiscal responsibility.
Additional reports from ITEP:
