OKLAHOMA CITY – A bill that repeals a controversial income tax break that is costing the state hundreds of millions of dollars has been signed into law.
Legislation passed in 2014 provided a mechanism to reduce Oklahoma’s tax rates.
Initially, the wealthiest Oklahomans paid 5.25 percent in income taxes. However, the measure dropped that tax rate to 5 percent and provided a way for it to continue to drop to 4.85 percent in the near future.
In 2014, the memorandum estimated that the state would lose an estimated $142 million in 2016 and $153 million in 2017 when the tax rate dropped to 5 percent.
It also estimated the state would lose $266 million in 2018 if the top income tax rate dropped to 4.85 percent.
Since that legislation was passed, state revenues have plummeted and the state faces a budget deficit of nearly $900 million.
State finance officials, including Secretary of Finance Preston Doerflinger and Treasurer Ken Miller, have suggested that lawmakers scrap or revise the trigger point until state revenues have stabilized.
Senate Bill 170 repeals the tax cut’s trigger, preventing the top tax rate from dropping to 4.85 percent in the coming years.
Last week, Gov. Mary Fallin signed the measure into law.