The Sales Tax Relief Credit, sometimes known as the “grocery tax 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 424,294 households in Tax Year 2020 for a total of $33.6 million, according to the Oklahoma Tax Commission’s 2021-2022 Tax Expenditure Report. A total of 840,000 individuals received the credit in 2020, or roughly one-fifth of the state’s population. Over time, the number of recipients of the sales tax relief credit had been steadily declining, as incomes rose while eligibility for the credit remained flat. However, 2020 saw an increase of some 40,000 households receiving the credit compared to 2018 (385,362), which likely reflects a drop in household income associated with Covid-19. Still, there were nearly 100,000 fewer households that received the credit in 2020 compared to 2010 (520,476).