Navigating the complexities of state taxes can be daunting, but understanding Oklahoma's tax landscape is essential for residents and newcomers alike.
n this guide, we'll explore key components of The Sooner State's tax system, from income and sales taxes to property taxes and retirement benefits.
Oklahoma state tax: Overview
Oklahoma can be a friendly place for homeowners, with median property tax bills well below the national average. Income tax rates top out at 4.75 percent, so higher earners may keep more of their income compared to many other states.
Not every tax in Oklahoma is as easy on the wallet, though. Some lower earners may actually pay more in income tax than they would elsewhere, and the state still taxes groceries and other essentials.
On the bright side, gas taxes are relatively low, and there are no estate or inheritance taxes to worry about.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
Oklahoma income tax
Oklahoma has a graduated state individual income tax rate ranging from 0.25 percent to 4.75 percent.
Oklahoma retirement taxes
Oklahoma tax on retirement income: Social Security benefits, Military pensions and Railroad Retirement benefits are not taxed by the state.
- Tax on Taxable Income: Low of 0.25% (on up to $1,000) and a high of 4.75% (on more than $7,200)
- The highest income tax bracket is lower in Oklahoma than in many other states, but most Oklahoma taxpayers fall into the state’s highest bracket.
- Social Security: Not taxable
- Pensions: Partially Taxable
- 401(k) and IRA Distributions: Partially Taxable
Oklahoma sales tax
Oklahoma's state sales tax rate is 4.5%. Localities can add as much as 4.45%, and the average combined rate is 9%, according to the Tax Foundation.
- Groceries: Taxable
- Prescription drugs: Taxable
- Clothing: Taxable
How much are Oklahoma property taxes?
Oklahoma homeowners pay some of the lowest property tax bills in the country, with a median tax bill of $942 and an average effective property tax rate of 0.77%.
Oklahoma Property Tax Breaks for Retirees
Residents 65 or older with a previous year household income at or below $89,500 may qualify for a property tax valuation freeze.
An additional homestead exemption of up to $1,000 is available to some residents. However, income limits and other qualifying criteria apply. The income limit for the additional homestead exemption is much lower than for the property tax freeze.
Oklahoma gas tax
Gasoline |
$0.16 per gallon |
Diesel |
$0.13 per gallon |
Source: Sales Tax Handbook
Oklahoma tax on alcohol and tobacco
Product |
Tax Amount |
|---|---|
Cigarettes |
$2.03 per pack |
Cigars Little and Large |
$1.20 per 10 cigars |
Snuff and Tobacco |
60%-80% factory list price |
Medical Marijuana |
11.5% |
Source: Sales Tax Handbook
Product |
Tax Amount |
|---|---|
Wine |
$0.72 per gallon |
Beer |
$0.40 per gallon |
Liquor |
$5.56 per gallon |
Source: Sales Tax Handbook
Oklahoma estate and inheritance taxes
There is no estate or inheritance tax in Oklahoma.
