Members of the State Senate Friday approved a pair of tax reduction bills that will save working families, veterans and retirees hundreds of dollars annually on their state income taxes.
Senate Bill 435 passed the Senate on a 40-7 vote. It contains provisions to raise the standard deduction – the single most effective method of lowering taxes on working families, said Senator Jay Paul Gumm, author of the measure.
“Raising the standard deduction will strengthen families by putting money back in the pockets of every Oklahoma taxpayer and help us make a better tomorrow for our children,” said Gumm, a Democrat from Durant.
SB 435 also eliminates the state’s highest income tax rate of 10 percent by eliminating the “Method II” portion of the income tax code and increases the amount of retirement income that is exempt from state income tax.
Senate members also passed a companion measure Friday, sending House Bill 1547 to Governor Brad Henry on a second 41-3 vote The House measure lowers income tax rate most Oklahomans pay from 6.65 percent to 6.25 percent and eliminates capital gains taxes for corporations.
Combined the two measures will save a working family of four making $50,000 more than $200 a year on their state income taxes.
The tax cuts, as contained in nearly two dozen bills passed in the Senate this week, total $58 million in Fiscal Year 2006 and when fully implemented in FY 2007 will save Oklahoma taxpayers more than $150 million annually.
“This package of targeted tax cuts will strengthen families, boost small businesses, and give every Oklahoma community an opportunity to fulfill its promise,” Gumm said. “It will put money back in the pockets of working families and make Oklahoma a more attractive retirement destination.
“It will accomplish all of those things while protecting the state’s ability to maintain its investment in public education, health care, job creation and the services our state’s most vulnerable citizens count on every day.”