This legislative session, Oklahoma aims to return more money to its residents by paving the way to eliminate income tax. House Bill 1539 has passed the Oklahoma House of Representatives and the Oklahoma Senate. It now awaits a final House vote before reaching Gov. Kevin Stitt’s desk for signing.
The bill will gradually reduce the income tax rate from 4.75%, by 0.25% each year that the state has a $300 million surplus, until the tax is eliminated. This approach lowers the income tax rate to zero without increasing other taxes. HB 1539 aligns with a broader trend, as nine other states are pursuing similar legislation to phase out income tax. These states join nine others, including Florida and Texas, that already have no income tax.
Sen. Michael Bergstrom, the bill’s sponsor, said, “There are nine states with no state penalty on work. Consistently, they’re experiencing better growth and opportunity, and this is not a surprise. When you don’t penalize work and job creation in the form of state income taxes, your citizens are better positioned to pursue opportunity for themselves and to expand opportunity for others.”
Not only is this good policy, it is popular policy. In recent polling, Independent Women found that “79% of likely voters, 78% of women, 72% of Gen Z, and 78% of Independents agree that President Trump’s 2017 tax cuts must be extended.” This shows that a vast majority of voters across party lines support tax cuts. Independent Women also heard from farmers and business owners how tax cuts significantly improved their lives. The research is there to show that tax cuts are inherently good.
The plan also benefits businesses, positioning Oklahoma as a hub for entrepreneurs, small businesses, and larger companies. Lower income taxes increase consumer spending, fostering business growth. States like Texas and Florida, with no income tax, have seen significant job growth and business relocations.
Oklahoma ties its tax cuts to revenue growth, ensuring fiscal caution. In years without a $300 million surplus, tax rates remain unchanged, safeguarding funding for essential services like infrastructure, education, and public safety.
This approach prioritizes taxpayers. Excess state revenue funds tax cuts rather than government pork-barrel projects. Oklahoma has led in bold policies like school choice. HB 1539 offers a chance to continue this leadership, providing a path to financial liberty and establishing the Sooner State as an economic powerhouse.