TULSA, Okla. (KTUL) — House Bill 2950 may pave the way to zero income tax for Oklahomans.
HB2950 would establish a flat tax rate and revenue triggers that would allow that rate to be reduced in the future.
“House Bill 2950 salvages a flat tax, raises the thresholds for single filers to 13,350 and head of household or joint 27,100,” said Representative Kevin Wallace when he presented this bill on the House floor.
HB2950 establishes a 4.75% flat personal income tax beginning in 2025 and establishes revenue triggers to allow this rate to be reduced incrementally in future years.
“The average taxpayer in Oklahoma won’t even notice this in their paycheck,” said Travis Roach, an associate professor and Chair of the Department of Economics at the University of Central Oklahoma.
Roach says this will be a small tax change unless you’re a top 10% earner.
“If we look at what most Oklahomans earn, the 90th percentile is at about $90,000 per year, which means 90% of Oklahomans basically won’t see this,” said Roach. “For the median, Oklahoman, this is about $11 extra per month. That is a very small tax change for your average Oklahoman. However, this mostly benefits the top 10% of earners in this state.”
Roach says this bill is constructed to gradually reduce the income tax down to zero.
“If this tax bill is just kind of chipping away at an already low-income tax, then our state is left without crucial resources. And we’re currently not spending those resources well,” said Roach.
Wallace was asked on the House floor how the state is going to have sustainable revenue to take care of these core services.
“The decrease in income tax does not occur unless additional revenue of 400 million comes in. So, the fact we’re leaving more dollars in the taxpayer pocket, those will roll back to the economy,” said Wallace in response. “When people have more money in their pocket, they will either invest it or spend it. And those will come back to the state in sales tax or income tax with the velocity of money through the economy.”
HB2950 passed in the House last week and now heads to the Senate for consideration.