New tax breaks for Oklahomans
Saturday, January 1st 2005, 4:02 pm
By: News On 6
OKLAHOMA CITY (AP) _ The new year will bring new tax breaks for Oklahomans, thanks to a series of voter-approved initiatives.
The benefits include a permanent, lower income tax rate, a capital gains tax exemption, an expansion of the income tax exemption on Oklahomans' pension income and more property tax relief for senior citizens.
The tax changes were authorized by voters in the Nov. 2 general election and become effective on New Year's Day.
Voters who passed State Question 713 made permanent a reduction in Oklahoma's 7 percent income tax rate to 6.65 percent. The same referendum raised the state tobacco tax a net 55 cents.
Previously, the 6.65 percent rate was temporary and could be increased to 7 percent if the state had a revenue downturn. The 6.65 percent rate will apply in 2005 when Oklahomans compute their 2004 income taxes.
Another tax change eliminates the capital gains tax on Oklahoma-based property. But Oklahomans will not be able to use the new exemption until they compute their income tax on earnings in 2005.
Oklahoma retirees also will get an increased exemption on their retirement income.
State and federal employees had received a $5,500 exemption on their retirement income. Private sector retirees get an exemption too, depending on their income level.
The new law will raise the exemption for retirees to $7,500.
Eligible Oklahomans will first use it when they compute their income tax on retirement income in 2005.
Income eligibility thresholds for private sector retirees to receive the $7,500 exemption are $37,500 for a single retiree and $75,000 for married couples.
State Question 714, which becomes effective Saturday, gives more seniors a freeze on their property tax assessments.
Before passage of SQ 714, the Oklahoma Constitution said the assessed value of a home for property tax purposes could not be increased if a homeowner is 65 or older and has a household income of no more than $25,000 a year.