The individual income tax is the single largest source of Money received by a government entity.... for state government. Unlike in some states, where cities can levy an income tax, in Oklahoma only the state government collects an income tax. Overall revenue from this tax in 2016 was over $2.9 billion. This made up 22 percent of all state and local tax revenue. The individual income tax is particularly important to funding state services, since it contributes about one-third of the state’s (or General Fund) The principal funding source for most government operations. Any revenue not restricted... revenue.
Advantages of an income tax are:
- it is vertically equitable; up to a certain level, the share of taxes increases as a share of the taxpayer’s income grows faster than the general level of economic growth; and
- it can generate substantial revenue at a low rate since total income levels are so high.
This tax has several disadvantages.
- Deductions and credits make the tax complicated for many taxpayers and make individuals with the same income often pay different tax amounts.
- Some argue that income taxes discourage work, savings and investing by taxing earnings. This is at best a minor concern in Oklahoma, where the top How much tax is paid for each unit of activity being taxed. For example, a... is 5.0 percent of income after deductions.
Oklahoma first levied an individual income tax in 1913 and has made many since. Most recently, the state’s top income tax rate has fallen from 6.75 percent to 5 percent since 2003. Since the mid-2000s, the Legislature has also increased the standard deduction, increased the exemption on retirement income, and exempted income from the sale of Oklahoma capital gains. As a result of these changes, collections from this tax have grown at less than one percent per year, well below the rates of income growth and inflation.
The individual income tax applies to most income earned by Oklahomans. Like many states, Oklahoma uses the federal adjusted gross income (AGI) as a starting point. This means changes in federal income tax law can affect Oklahoma tax levels as well. Taxpayers may have additions or subtractions from federal AGI to determine their state AGI.
Deductions and exemptions reduce the AGI to Oklahoma taxable income.
- For 2019, Oklahoma’s standard deduction is $6,350 to $12,700 depending on the taxpayer’s filing status. As of 2018, the deduction is no longer indexed to inflation and will remain at these amounts absent legislative action.
- Taxpayers who itemize their deductions (commonly mortgage interest, property taxes, charitable contributions, and medical expenses) may be able to deduct more than the standard deduction. As of 2018, the itemized deductions other than charitable contributions and medical expenses are limited to $17,000.
- Taxpayers also get a $1,000 exemption for each household member and may qualify for additional exemptions.
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 An amount owed to another entity, such as payroll for work performed by employees, amounts... for the previous year.
Like most income taxes, Oklahoma’s is progressive, meaning it starts at low rates on low incomes and rises gradually as income grows. For single tax filers, the lowest rate is currently 0.5 percent ($5) on the first $1,000 of taxable income ($2,000 for a married couple filing jointly or single head of household). The rates rise to a maximum of 5.0 percent on income over $7,200 for an individual and $12,200 for a married couple filing jointly or single head of household. Oklahoma’s income tax differs from the federal and many state taxes because it taxes very low incomes and because the top rate applies at comparatively low levels. Still, due to the standard deduction and personal exemptions, some 40 percent of all households have no income taxed at the highest rate.
Individual income tax revenues are apportioned as follows: 85.66 percent goes to the General Revenue A self-balancing accounting structure with revenues, expenditures, assets and liabilities used to track monies flowing..., 8.34 percent to the education reform (HB 1017) fund, 5 percent to the teachers retirement fund and 1 percent to reimburse local governments for a portion of the property taxes they lose due to the ad valorem manufacturing exemption.