Two tax reduction bills signed into law Tuesday by Governor Brad Henry will mean that Oklahoma working families will soon be paying fewer state income taxes, Senate Finance Chairman Jay Paul Gumm said.
“The tax cuts signed into law by the governor today 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.
Among the dozens of bills signed by the Governor Tuesday were Senate Bill 435 and House Bill 1547, the two key measures in the Legislature’s $150 million tax reduction package. Gumm is the Senate author of both measures.
SB 435 lowers taxes on working families by raising the standard deduction on state income taxes from $2,000 to $4,000 over the next two years – a provision championed by Gumm and Senate Democrats.
“Raising the standard deduction helps those Oklahomans who need it most, workign families who will spend their tax savings back into the economy in Main Street shops across our state,” Gumm said.
Additionally, the measure lowers income taxes paid by senior citizens by increasing the amount of retirement income that is exempt from state income taxes from $7,500 to $10,000. By lowering income taxes for senior citizens, Oklahoma will become a more attractive retirement destination, Gumm said.
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.
The measure also benefits disabled veterans by exempting them from paying the excise tax on one new vehicle purchase every three years.
HB 1547 includes a reduction in the top “Method I” income tax rate from 6.65 percent to 6.25 percent.
The net result of the two bills is that a working Oklahoma family of four with an income of $50,000 will save $225 on their state income taxes.
“This responsible package of tax reductions will provide a needed savings for working families while ensuring that the state can continue to provide the education, healthcare and public safety services Oklahomans depend upon in their daily lives,” Gumm concluded.