Income tax credit; creating the Children's Promise Act; providing credit for contributions to certain charitable organizations. Effective date.
SB 1398 creates the “Children’s Promise Act” and establishes a new Oklahoma income tax credit for taxpayers who make monetary contributions to qualifying charitable organizations. Beginning with tax year 2027, the credit equals 50% of the contribution, capped at 50% of the taxpayer’s income tax liability; married filing separately taxpayers may claim a 25% credit. The credit is nonrefundable, cannot reduce tax below zero, and unused credit may be carried forward for up to five subsequent tax years.
To qualify, a charitable organization must be a 501(c)(3), organized and headquartered in Oklahoma, and have a primary mission tied to child welfare, adoption, prevention of abuse or trafficking, pregnancy support and anti-abortion services, marriage counseling, certain public-school classes promoting traditional values, or workforce development for children in DHS custody. The organization must certify its eligibility to the Oklahoma Tax Commission, disclose that it does not support or affiliate with abortion-related services, and meet other operational and funding requirements. The Tax Commission must review certifications, may require recertification, and must publish a list of eligible organizations. The bill also allows pass-through entities to allocate the credit to owners and imposes an annual statewide cap of $5 million starting in tax year 2029, with a formula to prorate credits if claims exceed the cap.
The bill would add a new income tax credit provision to Title 68, Section 2357.701, changing Oklahoma tax law by creating a state incentive for donations to a defined class of charitable organizations. It also affects how those donations are treated for tax purposes by prohibiting taxpayers from also deducting the same contribution from taxable income. The Oklahoma Tax Commission would gain new administrative duties to certify organizations, publish eligible entities, monitor changes in eligibility, and enforce the annual credit cap. The measure primarily affects individual taxpayers, pass-through entity owners, and Oklahoma-based nonprofits that meet the bill’s eligibility criteria.
The committee record shows the bill advancing on a 8-2 vote in the Senate Revenue and Taxation Committee, indicating majority support but not unanimity. The available discussion is limited and procedural, with no extended debate captured in the transcript excerpt. Overall, the bill appears to have been received favorably enough to pass out of committee as amended, though the recorded nays suggest some reservations among members.
The main points of contention are likely the bill’s policy choices about which organizations qualify for the credit and the ideological conditions attached to eligibility. The bill expressly includes organizations involved in pregnancy support, anti-abortion services, marriage counseling promoting a lifelong man-woman union, and classes promoting “historical and traditional fundamental values,” which may draw criticism from opponents as viewpoint-based or socially conservative. Another possible concern is the $5 million annual cap and the administrative burden on the Tax Commission and nonprofits. Supporters would likely emphasize child welfare, adoption, and family-support services, while critics may focus on the exclusion of abortion-related organizations, the narrow eligibility rules, and the use of tax credits to subsidize selected private charities.