Oklahoma Rings In New Year With Lower Taxes

OKLAHOMA CITY (AP) The largest tax cuts in state history will go into effect as Oklahomans ring in the new year. <br/><br/>Legislation reducing the state income tax rate goes into effect on New Year's

Monday, January 1st 2007, 10:08 am

By: News On 6

OKLAHOMA CITY (AP) The largest tax cuts in state history will go into effect as Oklahomans ring in the new year.

Legislation reducing the state income tax rate goes into effect on New Year's Day along with increases in the standard deduction from state income taxes and a new exemption from the Oklahoma estate tax.

The income tax reduction and standard deduction changes will reduce state revenues by an estimated $94.8 million. The lower tax rates and higher standard deductions were passed by the 2006 Legislature and will apply to 2007 income.

Lower income tax rates and higher standard deductions will be reflected in state tax withholding tables that most employers use to withhold state taxes from their employees' paychecks, said Michelle Thompson, spokeswoman for the Oklahoma Tax Commission.

The state income tax rate will be 5.65 percent, beginning January 1. It was 6.25 percent last year.

The standard deductions from income tax will be $5,500 for married couples filing jointly and surviving spouses, and $4,125 for heads of households, who generally are single persons with dependents. The deduction was $3,000 for those groups last year.

It will be $2,750 for single persons or married persons filing separately. It was $2,000 last year.

For the first time, collateral heirs, which include nieces and nephews, get an exemption from estate taxes. Until this year, exemptions from the estate tax applied only to lineal heirs -- sons, daughters, grandsons and granddaughters. This year, collateral heirs will be treated the same as lineal heirs.

The Legislature passed a bill that will eliminate the estate tax in 2010. In 2007, collateral and lineal heirs will have a $1 million exemption from the Oklahoma estate tax. In 2008 the exemption will be $2 million. In 2009 the exemption will be $3 million.

In addition to tax cuts, a new boating safety law for youngsters 12 to 16 goes into effect on New Year's Day. The legislation grew out of the death of a 12-year-old Kyle Williams of Edmond in a 2004 accident on Lake Eufaula.

The Kyle Williams Boating Safety Education Act requires youngsters between 12 and 16 to complete a boat safety course before being allowed to operate a watercraft with an engine of 10 horsepower or more. Boating education courses are free through the Department of Public Safety.

A driver's license numbering law passed in 2005 will be implemented on Tuesday requiring new licenses to have a letter of the alphabet in front of the numbers.

Driver's licenses now have nine numbers, said Jeff Hankins, administrative officer of the driver's license division of the public safety department. The law will apply only when someone renews or gets a new license, he said.

He said the change is necessary because numbers being issued to new drivers in Oklahoma are in the same range as Social Security numbers being issued on the East Coast.