Oklahoma State Income Tax Rates and Brackets for 2025 Explained

Key Takeaways

• House Bill 2764 reduces Oklahoma’s top income tax rate from 4.75% to 4.5% starting 2026.
• Tax brackets simplify from six to three in 2026 with potential further cuts tied to revenue growth.
• 2025 uses existing tax rates; Governor Stitt supports the bill but has not signed it yet.

Oklahoma has recently seen important changes in its state income tax rates and brackets, with new legislation on the horizon that will affect residents, employers, and anyone with tax obligations in the state. This update explains what has changed, who is affected, when the changes take effect, what actions are needed, and what these changes mean for pending and future tax filings. The goal is to help everyone in Oklahoma understand the current rules, what’s coming next, and how to prepare for these updates.

Summary of What Changed

The most significant development is the passage of House Bill 2764 by the Oklahoma Legislature in May 2025. This bill introduces several key changes to the state income tax system:

• Reduction of the Top Marginal Rate: The highest personal income tax rate will drop from 4.75% to 4.5%, starting with the 2026 tax year.
• Simplification of Tax Brackets: The current six-bracket system will be replaced by just three brackets, also beginning in 2026.
• Trigger Mechanism for Further Cuts: If state revenues meet certain benchmarks, the top rate could be reduced further by 0.25% increments, possibly leading to the complete elimination of the state income tax over time.
• Safeguards: If Oklahoma experiences a revenue shortfall, any planned tax cut will be automatically canceled to protect essential government services.

As of July 10, 2025, House Bill 2764 has not yet been signed into law by Governor Kevin Stitt, but he has expressed strong support for tax cuts and modernization. The bill is widely expected to become law soon.

Who Is Affected by These Changes

These changes affect a wide range of people and organizations in Oklahoma:

• Individual Taxpayers: Anyone who lives or works in Oklahoma and files a state income tax return will be impacted by the new rates and brackets.
• Employers: Businesses must update their payroll systems to reflect the new withholding tables and rates once the changes take effect.
• Tax Preparers and Accountants: Professionals who help others file taxes need to be aware of the new rules to ensure accurate filings.
• New Residents and Immigrants: People moving to Oklahoma, including immigrants, should understand how the state’s tax system works and how it may change in the near future.
• Advocacy Groups and Public Service Organizations: Groups that monitor state revenue and public services will be watching how these changes affect funding for schools, healthcare, and other essential programs.

Effective Dates and Transition Timeline

• 2025 Tax Year: The current six-bracket system and rates remain in place for all income earned in 2025. Taxpayers will file their 2025 returns using these rules in early 2026.
• 2026 Tax Year: If House Bill 2764 is signed into law as expected, the new three-bracket system and the lower top rate of 4.5% will apply to income earned in 2026. Taxpayers will use these new rules when filing in early 2027.
• Future Years: The trigger mechanism could further reduce the top rate in 0.25% steps if state revenues grow enough, but only after the State Board of Equalization certifies that the benchmarks have been met.

Oklahoma state income tax rates and brackets for 2025

For the 2025 tax year, Oklahoma’s state income tax rates and brackets remain unchanged. Here’s how they break down for single filers:

For married couples filing jointly and heads of household, the brackets are similar but the income ranges are higher:

• $0 – $2,000: 0.25%
• $2,001 – $5,000: 0.75%
• $5,001 – $7,500: 1.75%
• $7,501 – $9,800: 2.75%
• $9,801 – $14,400: 3.75%
• $14,401 and above: 4.75%

Standard Deductions for 2025

• Single/Married Filing Separately: $6,350
• Head of Household: $9,350
• Married Filing Jointly: $12,700

These deductions are subtracted from your federal adjusted gross income to determine your Oklahoma taxable income. If you itemize deductions on your federal return, you can also itemize on your Oklahoma return, but the total is capped at $17,000 (not counting charitable contributions and medical expenses).

Withholding and Payroll Procedures

Employers in Oklahoma must use the latest withholding tables to calculate how much state income tax to take out of employees’ paychecks. These tables are updated to match the current tax brackets and rates. For example, a single employee paid semi-monthly would have the following withholding structure:

• $0 – $265: $0 withheld
• $265 – $306: $0 plus 0.25% of the amount over $265
• $306 – $369: $0.10 plus 0.75% of the amount over $306
• $369 – $421: $0.57 plus 1.75% of the amount over $369
• $421 – $469: $1.48 plus 2.75% of the amount over $421
• $469 – $565: $2.80 plus 3.75% of the amount over $469
• $565 and above: $6.40 plus 4.75% of the amount over $565

Employers must also consider each employee’s filing status and withholding allowances to ensure the correct amount is withheld. The Oklahoma Tax Commission provides detailed guidance and updated tables each year, which can be found on the official Oklahoma Tax Commission website.

Tax Filing Process: Step-by-Step

1. Determine Your Filing Status: Choose the correct status—single, married filing jointly, head of household, etc.
2. Calculate Oklahoma Taxable Income: Start with your federal adjusted gross income, then subtract either the standard deduction or your itemized deductions (if you qualify).
3. Apply the Tax Rates: Use the appropriate bracket and rate for your filing status and taxable income.
4. File Your Return: Submit your Oklahoma state tax return by the annual deadline, usually April 15. If the deadline falls on a weekend or holiday, it may be extended.

Required Actions for Taxpayers and Employers

• For 2025 Filings: Continue using the current six-bracket system and rates. Make sure you use the correct standard deduction and check the latest withholding tables.
• For 2026 and Beyond: Watch for updates from the Oklahoma Tax Commission and your employer about the new three-bracket system and lower top rate. Employers will need to update payroll systems, and taxpayers should review their withholding to avoid surprises at tax time.
• For Pending Applications: If you are in the process of moving to Oklahoma or starting a new job, make sure you understand which tax year your income will be taxed under. Income earned in 2025 will follow the old rules, while income in 2026 will likely follow the new rules if House Bill 2764 is signed into law.

Implications for Pending and Future Applications

If you are planning to move to Oklahoma, start a new job, or change your tax status, it’s important to know which set of rules will apply to your income. For example:

• Immigrants and New Residents: If you arrive in Oklahoma in late 2025, your income for that year will be taxed under the old six-bracket system. Starting in 2026, you’ll likely benefit from the lower top rate and simpler brackets.
• Employers Hiring New Workers: Make sure your payroll system is ready for the new withholding tables and rates once they take effect.
• Tax Preparers: Stay updated on the latest guidance from the Oklahoma Tax Commission, especially as the new law is finalized and implemented.

Policy and Stakeholder Perspectives

The changes brought by House Bill 2764 have sparked debate among lawmakers, business groups, and advocacy organizations.

• Supporters say the lower top rate and simpler brackets will make Oklahoma more attractive to businesses and new residents. Senate President Pro Tempore Lonnie Paxton called the bill a “smart, responsible step toward long-term tax reform,” highlighting the balance between tax relief and fiscal responsibility.
• Governor Kevin Stitt has voiced support for tax cuts and efforts to modernize the state’s tax system, though he has not yet signed the bill as of July 10, 2025.
• Business Groups believe the changes will help create jobs and boost investment in Oklahoma.
• Critics worry that if state revenues fall, the trigger mechanism could lead to cuts in essential services like education and healthcare. Fiscal watchdogs stress the need for careful monitoring to ensure the state can still fund its core responsibilities.

Long-Term Outlook and Monitoring

The trigger mechanism in House Bill 2764 means that Oklahoma’s state income tax rates could continue to fall in the future, but only if state revenues grow enough to support further cuts. The State Board of Equalization will review revenue numbers each year and decide whether the next rate reduction can go into effect. If revenues drop, any planned cut is canceled to protect important government services.

This approach gives Oklahoma flexibility to lower taxes when times are good, while still protecting the state’s ability to fund schools, roads, and other vital programs during downturns.

Practical Guidance and Next Steps

• Taxpayers: Review your current withholding and tax planning for 2025. Stay alert for updates about the new law and be ready to adjust your withholding or estimated payments for 2026.
• Employers: Prepare to update payroll systems and withholding tables for the 2026 tax year. Communicate with employees about any changes to their take-home pay.
• New Residents and Immigrants: Learn about Oklahoma’s tax system and how the upcoming changes may affect your finances. Consider consulting a tax professional if you have questions about your specific situation.
• Tax Preparers and Accountants: Monitor official updates from the Oklahoma Tax Commission and be ready to help clients navigate the transition to the new system.

Where to Find Official Information

For the most accurate and up-to-date information, visit the Oklahoma Tax Commission’s official website. Here you’ll find:

• Current and upcoming tax rates and brackets
• Withholding tables and employer guidance
• Forms and instructions for filing your state tax return
• Contact information for questions or help

You can also check the Oklahoma Legislature’s website for updates on House Bill 2764 and other tax-related legislation.

Summary Table: Oklahoma 2025 Income Tax Brackets (Single Filers)

Key Takeaways

• Oklahoma’s state income tax rates and brackets for 2025 remain unchanged, with a six-bracket system and a top rate of 4.75%.
• House Bill 2764 will reduce the top rate to 4.5% and simplify the brackets to three, starting in 2026, if signed into law.
• A trigger mechanism could lead to further rate reductions or even the elimination of the state income tax, but only if state revenues grow enough.
• Employers and taxpayers should use the latest withholding tables and stay informed about upcoming changes.
• Official resources are available at the Oklahoma Tax Commission website for forms, tables, and guidance.

As reported by VisaVerge.com, these changes reflect Oklahoma’s ongoing efforts to modernize its tax system while balancing the need for fiscal responsibility and economic growth. By staying informed and prepared, residents, employers, and newcomers can make the most of the new rules and avoid surprises at tax time.

If you have questions or need help, the Oklahoma Tax Commission is your best source for official information and support. Remember to check for updates as the new law is finalized and implemented, and consider reaching out to a tax professional if you need personalized advice.

Learn Today

House Bill 2764 → A 2025 Oklahoma law proposal to reduce top income tax rates and simplify tax brackets starting 2026.
Top Marginal Rate → The highest percentage of income tax charged on the largest portion of taxable income.
Trigger Mechanism → A system that adjusts tax rates based on state revenue benchmarks, enabling further cuts or cancellations.
Standard Deduction → A fixed dollar amount reducing taxable income, varying by filing status in Oklahoma’s tax system.
Withholding Tables → Employer tools that calculate the amount of state income tax to withhold from employees’ paychecks.

This Article in a Nutshell

Oklahoma plans to lower its top income tax rate and simplify brackets under House Bill 2764. Changes begin in 2026 if signed. Taxpayers and employers must prepare for updates affecting withholding and filings. The bill includes protections to maintain crucial government services amid potential cuts.
— By VisaVerge.com