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 never been increased. 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 385,362 households in Tax Year 2018 for a total of $31.2 million, according to the Oklahoma Tax Commission’s 2019-2020 Tax Expenditure Report. Some 780,000 Oklahomans received the credit in 2018, or roughly one-fifth of the state’s population. However, over time, as incomes have risen while eligibility for the credit has remained flat, the number of recipients of the sales tax relief credit has been declining. In FY 2010, 520,746 households claimed the credit for a total of $43.2 million, according to the 2009-10 Tax Expenditure Report.