By Emma Murphy, Oklahoma Voice
OKLAHOMA CITY — Even as legislators prepare to return to the Capitol with less to spend, Gov. Kevin Stitt announced that he plans to urge them to further “protect Oklahoma taxpayers” by slashing the state’s personal income and corporate tax rates during the upcoming session.
Ahead of his State of the State address, the Republican governor said he plans to press lawmakers to cut both tax rates by a half a percentage, but hopes that legislators will move forward in future sessions with eliminating the state’s 4.75% personal income tax rate.
“I’ve been saying it for six years now. We need more taxpayers, not more taxes,” Stitt said. “Every time we’ve cut taxes, we’ve seen our revenue actually increase. And so what people don’t realize is when we give money back to the taxpayer, the money doesn’t disappear. It just stays in the citizens’ pockets. And I believe that they can spend their money better than the government can.”
Stitt’s call to further cut taxes comes less than a year after lawmakers eliminated the state’s share of its tax on groceries, which is expected to eliminate around $370 million in revenue. It also comes as lawmakers expect to have $191 million less to allocate for the 2026 fiscal year, partially due to the elimination of the grocery tax and expanded funding for a private school tax credit program.
House Speaker Kyle Hilbert, R-Bristow, said in a statement that last year the Legislature passed the largest tax cut in state history while also increasing savings, but isn’t sure it can happen again this year. He will review the Governor’s proposed budget.
“The preliminary Board of Equalization numbers show we likely cannot continue to do both of those things simultaneously this year, so the Legislature is prepared to make tough decisions about how to spend taxpayer dollars wisely as we enter into a projected downturn in recurring revenue for the first time in several years,” he said.
Cutting the personal income tax cut by half a percent is expected to cost $660 million, according to David Hamby of the Oklahoma Policy Institute, a Tulsa-based think tank. The impact of cutting the corporate tax was not immediately clear Wednesday, but Hamby said it brought in nearly $915 million in revenue in 2024.
Losing $660 million in revenue is equal to about 5% of the appropriations for the current fiscal year and more than the state allocated to the Department of Corrections this year, Hamby said.
If the income tax were eliminated entirely, Hamby estimates that state revenue would be reduced by $5.4 billion annually. This is about 44% of this fiscal year’s appropriations of $12.2 billion.
The grocery tax cut, which took effect in late August, has “tremendously helped” working families as inflation raises the price of groceries, Stitt said.
Stitt also pushed for an income tax cut last session, but the effort failed to garner support in the Senate.
Senate President Pro Tem Lonnie Paxton, R-Tuttle, said in a statement Wednesday that he agreed with Stitt that taxpayers should be given relief in the form of a tax cut. But he said there will need to be an “ongoing conversation” throughout this session on how it should be done, and he looks forward to working with the Governor’s Office.
Senate Minority Leader Julia Kirt, D-Oklahoma City, said her caucus wants to put money back in the pockets of working Oklahomans, but do so by reforming the current tax code.
“Any tax reform should require wealthy households and corporations to pay their fair share,” she said in a statement. “We are glad to roll up our sleeves with our colleagues to work out the best tax cuts that will benefit Oklahomans who need it most.”
Oklahoma lawmakers filed nearly 190 bills on taxation, most related to cutting corporate or income taxes.
Stitt said he has already cut taxes for businesses two percentage points and that he hopes to add to that momentum in 2025 with a further reduction. He said it will signal to businesses that they can set up shop and be successful in Oklahoma. Oklahoma currently has a 4% corporate income tax rate.
While calling for lower taxes, Stitt also said he wants to protect the savings that Oklahoma has accumulated during his time in office.
“We’ve got $4.6 billion in savings. So I’m not saying we can’t strategically invest in infrastructure or a mental health hospital or this or that,” he said. “But you also realize since 2019, our appropriations have gone from about $8 billion to over $12 billion. So I’m not afraid to invest in certain things, but we cannot continue to increase spending every year.”
Oklahoma has about $1.4 billion in its Rainy Day Fund and nearly $664 million in the Revenue Stabilization Fund, according to the Board of Equalization.
Stitt said he’ll also press for policies that protect the Oklahoma “way of life” by encouraging power generation, protecting farmers, and improving response times from regulatory bodies to meet the needs of businesses.
He said this year would be a return to “normalcy” and “common sense” following the election of President Donald Trump.
Stitt will deliver his annual State of the State address Monday, kicking off the 60th session of the Legislature.
