State Sen. Steve Russell’s bill to exempt Oklahoma soldiers from state income tax on federal pay is one step closer to becoming law. Senate Bill 881, co-authored by Rep. Gary Banz, R-Midwest City, was approved on a bipartisan vote of 45 to 0 on Friday. Russell said he was elated that the bill was so close to the governor’s desk. The tax exemption would apply to all troops, whether they are National Guard, Reserve or active.
“It’s important because even though we’re the second highest recruiting state in the country, we lose two out of three soldiers when they go to other states with more favorable tax laws,” said Russell, R-Oklahoma City. “For every 10,000 soldiers that we lose in the state of Oklahoma, we also lose $6 million in just motor vehicle fees alone. When you start adding up all the revenues lost with Oklahoma soldiers who claim residency elsewhere, it is a tremendous hit to our economy. If our troops remained Oklahoma residents, we’ll recoup far more than the cost of the tax break. Our soldiers have always loved their home state, just not the tax burden. Now that will be lifted.”
Russell said according to recruitment records, Oklahoma should have 54,000 soldiers. Instead, according to the Department of Defense, there are approximately 21,000 Oklahomans in the service. Russell says the state could persuade more than 30,000 Oklahomans to reclaim their state residency if his legislation is enacted.
“I would really like to thank Governor Brad Henry, Senate President Pro Tempore Glenn Coffee and House Speaker Chris Benge for their great cooperation and work in making this happen. It was a unified effort, and because of their involvement this bill is moving forward,” said Russell, who also thanked Senate Appropriations Chairman Mike Johnson for carrying the bill on the floor and his House co-author, Rep. Banz for his work.
SB 881 now returns to the House for a final vote.