By Emma Murphy, Oklahoma Voice
OKLAHOMA CITY — An income tax cut heralded by the governor will cost state coffers hundreds of million less than an independent projection indicated, the Governor’s Office said Thursday.
Meyer Siegfried, a spokesman for Gov. Kevin Stitt, said the Oklahoma Tax Commission estimates the actual fiscal impact of a half a percent personal income tax cut will be about $202 million for the 2026 fiscal year, not the estimated $660 million calculated by the Oklahoma Policy Institute, an independent, nonpartisan Tulsa-based think tank.
Siegfried said neither projection factors in “key economic indicators” such as people moving to Oklahoma.
Siegfried released the estimate a day after both the Tax Commission and Governor’s Office did not respond to requests to provide it. That same day, the state Office of Management and Enterprise Services, which helps project the budget, said that Oklahoma Voice would need to file an open records request to obtain information about the projected impact.
Stitt announced his plan to urge lawmakers to further “protect Oklahoma taxpayers” by cutting the state’s personal income and corporate tax rates by 0.5% during the upcoming session, but hoped legislators will move forward in future sessions with eliminating the state’s 4.75% personal income tax rate.
The Governor’s Office estimated the cut to the corporate income tax would have an impact of about $37.4 million. The current rate for corporate taxes is 4% which brought in nearly $915 million in revenue in 2024.
The Oklahoma Policy Institute did not have estimates for the impact of this proposed tax cut, but said corporate tax cuts tend to aid large corporations rather than small businesses.
These proposed tax cuts come less than a year after lawmakers eliminated the state grocery tax, which was called the largest tax cut in state history.
Lawmakers will have about $191 million less to allocate to state agencies this year and are looking for places to tighten the state budget.
Some lawmakers expressed skepticism about Stitt’s proposed cuts Wednesday, meaning his proposal could meet resistance this session.
David Hamby, communications director for the Oklahoma Policy Institute, said the think tank has high confidence in its projections and the estimate provided by the Governor’s Office seemed low for a whole year of tax cuts.
He said the Oklahoma Tax Commission in 2023 projected that a 0.25% cut to the income tax would equate to $92 million in the first year, but $235 million when fully enacted. Hamby said the Oklahoma Policy Institute had projected that same proposed cut would impact state revenue by $293 million.
“As Oklahoma’s population grows, more people will need services,” Hamby said. “But if tax cuts reduce revenue and the budget stays the same, the money will have to cover the needs for more people. This means there will be less state funding available to meet essential needs for everyone.”
Between 2020 and 2024, the U.S. Census Bureau estimated that Oklahoma’s population grew by less than 136,000 people.
Oklahoma voters in 1992 passed State Question 640 that requires a super majority in both chambers to increase taxes or a vote of the people. It only takes a majority to cut taxes.
