Income tax; exempting certain income from taxable income. Effective date.
Summary
SB 100 amends Oklahoma’s income tax adjustment statute to add a new exemption for certain tip income beginning in tax year 2026. Under the bill, income reported as tips on IRS Form 4137 and on written or electronic tip statements provided to an employer would be excluded from Oklahoma taxable income. The bill also updates statutory language and references within the existing income tax adjustment provisions.
The measure is drafted as an amendment to 68 O.S. 2021, Section 2358, which is the state’s core statute governing additions to and subtractions from federal taxable income in determining Oklahoma taxable income and Oklahoma adjusted gross income. Because the bill inserts the tip-income exclusion into that section, it would become part of the state’s broader framework for income tax conformity and state-specific deductions and exemptions. The bill is set to take effect November 1, 2025, but the tip exemption itself applies to tax year 2026 and later.
The bill’s overall impact is narrow in scope but significant for workers who receive tips, since it would reduce Oklahoma taxable income for qualifying tip earnings and potentially lower state income tax liability for affected taxpayers. It does not change the state’s tax rates or brackets; instead, it modifies the base of income subject to tax by carving out a specific category of compensation. The bill would also require the Oklahoma Tax Commission to administer the exemption within the existing income tax system.
There is little recorded public or committee sentiment in the available materials because no committee transcripts or vote history were provided. Based on the bill’s content and caption, the measure appears to be framed as a tax relief proposal rather than a controversial restructuring of the tax code. The absence of recorded debate or votes makes it difficult to identify a broader political consensus or opposition from the available record.
No specific points of contention are documented in the provided context. Potential areas of policy interest, however, include whether exempting tip income should be limited to reported tips, how the exemption would interact with employer reporting and tax compliance, and whether the revenue loss would affect state collections. Those issues are not reflected in the available transcripts or votes, but they are the most likely subjects of discussion for a bill of this type.
Impact
SB 100 would amend 68 O.S. 2021, Section 2358, the statute governing Oklahoma additions and subtractions to federal income for state tax purposes, by adding a new subtraction for certain tip income beginning in tax year 2026. The bill would affect individual income taxpayers who report tips on IRS Form 4137 and through employer tip statements, reducing their Oklahoma taxable income and potentially their state income tax liability. It does not alter tax rates, but it changes the income base subject to tax and would be administered through the Oklahoma Tax Commission under the existing income tax framework.
Sentiment
The available record shows no committee transcript or vote history, so there is no documented debate to measure directly. On its face, the bill appears to have a generally favorable, tax-relief orientation because it exempts a specific category of earned income from state taxation. Without recorded testimony or votes, however, the level of support or opposition cannot be determined from the provided materials.
Contention
No specific points of contention are documented in the provided context. If debated, likely issues would include whether the exemption should apply only to reported tips, the administrative burden on employers and the Tax Commission, and the fiscal effect on state revenue. The available materials do not identify any legislators, stakeholders, or organizations taking opposing positions.