Oklahoma HB 2764: 4.5% Top Rate and Three Brackets to Start 2026

(OKLAHOMA) House Bill 2764 is now the rulebook for Oklahoma’s next round of income tax cuts, and it matters for anyone planning a move. Governor Kevin Stitt signed the bill on May 28, 2025, after the state House approved it 74-19 on May 20 and the Senate passed it 34-11 on May 22. The law takes effect November 1, 2025, but the new rates apply to income you earn starting January 1, 2026, not to 2025 wages.

What changes in 2026, in plain terms

HB 2764 lowers the top income tax rate from 4.75% to 4.5% and collapses Oklahoma’s six brackets into three beginning with the 2026 tax year. State leaders said the goal is simpler filing and a long-term plan that could, if revenue stays strong, reduce the personal income tax to zero through future cuts.

The first-year impact is significant:

• The initial rate cut is projected to save Oklahomans $340.5 million each year.
• The bracket consolidation adds roughly $87 million more in relief.

Supporters, including Senate President Pro Tempore Lonnie Paxton and House Speaker Kyle Hilbert, argue the package rewards economic growth and helps recruiting. Critics counter that higher earners receive the largest dollar savings, and some policy groups warn future cuts could squeeze funds for schools and health care if growth slows.

The “trigger” that controls future rate drops

Starting after 2026, the law sets up a trigger mechanism:

• The State Board of Equalization reviews total state tax collections and certifies whether collections exceed the prior peak by enough to cover 1.25% of the cost of another 0.25% cut.
• If the benchmark is met, the top income tax rate drops another 0.25%.
• The process can repeat, step by step, until the rate reaches zero.
• If revenues don’t hit the benchmark, the cut pauses automatically.

This trigger matters for new residents and immigrants because it affects long-term planning. For now, treat 4.5% as the known top rate for 2026 income; any later cuts depend on future state revenue reports.

Key takeaway: The 2026 rate is fixed at 4.5%, but future cuts are conditional — they require yearly revenue benchmarks to be met.

Timeline you can plan around (late 2025 through 2027)

The law is effective in late 2025, but the tax change applies to income earned in 2026. Here is a practical sequence most people will experience:

1. Now through December 31, 2025: Oklahoma wages are taxed under the existing six-bracket system with a 4.75% top rate.
2. November 1, 2025: HB 2764 takes legal effect (relevant for agencies and payroll planning).
3. January 1, 2026: New three-bracket structure and 4.5% top rate apply to income earned from this date forward.
4. Early 2026: Employers should begin using the updated withholding tables for 2026 paychecks.
5. April 15, 2026: Typical deadline to file your 2025 Oklahoma return (still under old rates).
6. Early 2027: First filing season where most residents will see HB 2764’s new rates on returns for 2026 income.

According to analysis by VisaVerge.com, many newcomers make mistakes in the gap between signing and the first filing season — especially if they arrive in late 2025 and assume the lower rate applies immediately.

Payroll withholding: what workers and employers should do

Most people notice tax changes first through withholding, not at filing time.

• The Oklahoma Tax Commission has issued new 2026 withholding tables.
• Employers should update payroll systems before the first 2026 pay period.
• Employees should ask HR when the new tables will be loaded to avoid over- or under-withholding.

Example payroll rule (percentage method):

• For a single semi-monthly payroll period, wages over $13,550 are withheld at $109.25 + 4.5% of the excess over $13,550.

For authoritative resources:

• Oklahoma Tax Commission’s official forms and publications page: Oklahoma Tax Commission’s official forms and publications page
• IRS Form W-4 information (for federal withholding): IRS Form W-4 information (for federal withholding)

Note: Federal withholding doesn’t change because of HB 2764, but your overall cash flow may change and could influence how you set federal withholding.

Step-by-step: filing your Oklahoma return during the switch

If you’re new to state returns, Oklahoma’s main individual income tax return is Form 511. Typical filing path during the transition:

1. Confirm your residency period for the year
   • If you move mid-year, you may be a part-year resident. Keep move dates, lease start dates, and first day of Oklahoma work.
2. Collect income documents
   • W-2s, 1099s, and pay stubs showing Oklahoma withholding (especially if you’re a nonresident with Oklahoma-source income).
3. Start from your federal numbers
   • Oklahoma generally builds from federal adjusted gross income, then applies Oklahoma additions, subtractions, and deduction choices.
4. Apply the correct year’s rate table
   • 2025 income: use the six brackets and 4.75% top rate.
   • 2026 income: use the new three brackets and 4.5% top rate.
5. File and track refund or balance due
   • E-filing is faster and reduces manual errors.
6. Keep copies for immigration and lending files
   • State returns often appear in mortgage applications and document work history.

Get the right forms at the Oklahoma Tax Commission’s download page for individual income tax forms: Oklahoma Tax Commission’s download page for individual income tax forms — select the tax year you are filing.

Notes that matter for immigrants, visa holders, and mixed-status families

HB 2764 is not immigration law, but state taxes influence where people choose to live and work.

• A lower top income tax rate can increase take-home pay for workers on employment visas.
• Families often redirect tax savings toward rent deposits, car payments, child care, or immigration filing and legal costs.

For immigration fees and official schedules, consult USCIS: USCIS — do not rely on social media estimates.

Two important cautions:

• If you arrive late in 2025, your first Oklahoma return may include only a small slice of income taxed under the old rates, while the 2026 return is the first to reflect HB 2764.
• The trigger mechanism can pause future cuts; there’s no guaranteed straight path to zero.

Governor Stitt has framed the package within broader fiscal numbers: $4.6 billion in state savings and $11.24 billion in fiscal year 2026 revenues. For workers coming from other states, lower taxes may stretch your budget further, but you still must plan for housing, health insurance, and the timing of U.S. tax seasons.

Final checklist for movers and new residents

Ask yourself these three practical questions:

• Are you withholding enough under the new Oklahoma tables?
• Are you keeping documents that prove when you became an Oklahoma resident?
• Do you have a clear plan for any 2026 tax savings — e.g., debt payoff, emergency fund, or immigration filing?

Keeping these items in order will help you avoid surprises during the transition to HB 2764.