You've crunched the numbers and rounded up the receipts. The deadline to file those pesky income taxes has arrived.
Oklahoma's income tax is unnecessarily complicated. Because of our graduated, six-bracket income tax, each segment of your income is taxed at a different rate. Calculating the total amount owed requires a multi-step math problem or a confusing table from the Oklahoma Tax Commission (no joke, the OTC’s official instructions for calculating income tax liability are 20 pages long!).
The legislature is considering a bill, House Bill 2285, that adopts our recommendation to simplify the individual income tax by moving to a single rate. The bill would:
Consolidate six tax brackets into one single bracket—all income would be taxed at the same rate (4.5 percent);
Increase the standard deduction to ensure low-income filers to not see a tax increase;
Remove the marriage penalty built into the current six brackets; and
Establish fiscally responsible revenue triggers that enable additional future rate cuts, but only if the state has enough revenue to fund existing programs and services.
Moving to a single-bracket income tax is a no-cost proposition for policymakers, but it would make life a little easier for taxpayers and would move our tax system in a more economically competitive direction.
Here’s to a tax table-free April of 2024, hopefully the first year Oklahomans won’t need 20 pages of instructions to accurately calculate how much they owe in taxes!