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, a taxpayer may claim a credit equal to 50% of the contribution, subject to a cap of 50% of the taxpayer’s income tax liability; married individuals filing separately may claim a 25% credit. The bill also bars taxpayers from taking the same contribution as an itemized or adjusted gross income deduction, prohibits the credit from reducing tax liability below zero, and allows unused credit to be carried forward for up to five subsequent tax years.
The bill defines “eligible charitable organization” narrowly. To qualify, an organization must be a 501(c)(3), organized and headquartered in Oklahoma, and primarily serve one or more listed purposes involving children in or at risk of Department of Human Services custody, adoption and permanency, prevention of abuse or trafficking, pregnancy support and anti-abortion services, marriage counseling, public school classes promoting “historical and traditional fundamental values,” or workforce development for youth in DHS care. The organization must certify its eligibility to the Oklahoma Tax Commission, disclose that it does not provide or support abortion-related services, maintain an in-state presence, meet client and funding thresholds, and use credited contributions to serve Oklahoma residents. The Tax Commission must review certifications, may require recertification, and must publish a list of approved organizations.
The bill also allows the credit to pass through to partners, shareholders, members, or other equity owners of certain pass-through entities. Starting in tax year 2029, the total annual amount of credits is capped at $5 million statewide, with the Tax Commission required to calculate and publish a reduction percentage if claims exceed that limit. The act becomes effective November 1, 2026.
In state-law terms, SB 1398 adds a new income tax credit provision to Title 68 and creates a new administrative certification and oversight process for qualifying charities. It affects taxpayers who donate to approved organizations, the organizations themselves, and the Oklahoma Tax Commission, which gains responsibility for eligibility determinations, publication of approved entities, and annual credit-limit administration.
The committee record shows generally favorable support, with the Senate Revenue & Taxation Committee advancing the committee substitute on an 8-2 vote. The discussion provided does not include extended debate, but the structure of the bill suggests the main points of interest are the tax incentive for charitable giving, the eligibility restrictions placed on nonprofits, and the annual cap on total credits.
SB 1398 would amend Oklahoma income tax law by adding Section 2357.701 to Title 68, creating a nonrefundable credit for contributions to certified eligible charitable organizations and establishing detailed certification, reporting, and enforcement duties for the Oklahoma Tax Commission. It would also limit how contributions are treated for tax purposes, allow pass-through allocation of credits, and impose a statewide annual credit cap beginning in 2029.
The available voting history indicates the bill was received positively in committee, passing the Senate Revenue & Taxation Committee on an 8-2 vote after consideration of the committee substitute. The transcript reflects no substantial floor-style debate in the excerpt provided, suggesting the measure moved with more support than opposition at the committee stage, though not unanimously.
The main areas of contention appear to be the bill’s policy choices about which charitable organizations qualify for the credit and the ideological conditions attached to eligibility. The bill excludes organizations that provide, fund, refer for, or affiliate with abortion services and includes organizations tied to pregnancy support, marriage counseling, and classes promoting “historical and traditional fundamental values,” which may draw criticism from opponents of viewpoint-based or socially selective tax incentives. The annual $5 million cap and the Tax Commission’s authority to reduce credits if claims exceed the limit may also be points of interest for fiscal oversight concerns, while supporters are likely to emphasize child welfare, adoption, and family-support services.