What three taxes does Oklahoma Gov. Kevin Stitt want to cut? Here's what to know

  • In Business
  • 2023-02-06 23:57:24Z
  • By The Oklahoman

Here's a bit of welcome news! Oklahoma's governor says state government has too much money and needs to start giving some of it back. Three specific tax cuts were called for by Gov. Kevin Stitt on Monday during his annual State of the State address.

Stitt's call for lower taxes drew wide applause from the Republican-controlled state Legislature.

At least one proposal even drew praise from Democrats.

But making changes to the state's tax rate often brings fierce debate, especially since the three proposals from Stitt would cost the state about $655 million a year.

"We can provide families with immediate relief at the store and with bigger paychecks," Stitt said Monday.


Here's what the governor wants to cut:

State sales tax on groceries would be eliminated

Like last year, Stitt called for an end to the state's 4.5% sales tax on groceries, his attempt to fight back against inflation (have you seen the price of eggs?).

Previous calls to end this tax have drawn bipartisan support, especially as Oklahoma is one of only 12 states (as of last year) that still taxes groceries.

But the state Legislature has been unable to find the political will to follow through.

Bills seeking to end the tax typically define groceries as anything used for "ingestion or chewing by humans," although marijuana, alcohol, tobacco and dietary supplements would still be taxed.

Meat products for sale are pictured Thursday, Oct.
Meat products for sale are pictured Thursday, Oct.  

The average three-person household in Oklahoma spends about $216 a year in state sales taxes on groceries, according to the Oklahoma Tax Commission.

House Minority Leader Cindy Munson said her caucus supports cutting the tax on groceries.

"That is something that House Democrats have been working on for years, and the governor has jumped on board and continues to champion it," Munson, D-Oklahoma City, said after Stitt's speech. "So hopefully, our colleagues on the other side of the aisle will join."

Personal income tax would be reduced

Stitt also called for a 0.76% reduction in the individual income tax rate.

A few months ago, the Republican leader of the House endorsed this idea.

"We have chipped away at that (over) the last few years ... but we still have work to be done," said House Speaker Charles McCall, who oversaw an income tax cut in 2021.


While Oklahoma's rate is lower than many states in the region, McCall said it was still not as low as Colorado or Texas, which does not have a personal income tax.

Some lawmakers have called for a more targeted income tax cut, rather than one that is across the board.

"I think people are constantly shocked ... that people who make $18,000 or $25,000 are paying income tax," Sen. Julia Kirt, D-Oklahoma City, told The Oklahoman. "If we want to talk about relief at all, we need to talk about very targeted relief that truly hits the people who are paying a larger percentage of their income and have a hard time getting by."

ODOT:How a new program could replace the fuel tax with fees according to miles driven

Corporate tax rate would also be trimmed

The third tax cut called for by Stitt is a reduction in the state's corporate Income tax rate by 0.75%.

A few years ago, lawmakers cut the corporate tax rate to 4%, one of the lowest rates in the nation. A bill proposing another cut last year failed.

All three of Stitt's proposals drew praise from low-tax groups, including Americans for Tax Reform.

"Governor Stitt gets it, the state is taking in too much money, and those tax dollars belong back in the pockets of hard-working Oklahomans," said Grover Norquist, president of ATR.


If tax cuts are successful this year, it likely will take weeks, if not months, of backroom debates and political bargaining. Reducing taxes would impact the state budget, which is often crafted in secret and unveiled by leaders near the end of the session.

More:Oklahoma budget process can be mysterious, even for many lawmakers

Some budget leaders have expressed concern that cutting taxes now would make the state vulnerable to a potential economic downturn.

Sen. Roger Thompson, the chair of the Senate's budget committee and an important voice on tax policy, said he didn't think the state had enough money to enact all three of Stitt's proposals.

"I'm not against tax cuts, but it needs to be well thought out," Thompson told reporters Monday.

Last month, a legislative committee published a tax modernization report that cautioned against tax cuts.

Instead, the committee recommended a focus on tax incentives rather than a decrease in the tax rate.

This article originally appeared on Oklahoman: Oklahoma Gov. Kevin Stitt proposes tax cuts in grocery, income taxes


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