Oklahoma Tax Changes In Store In New Year

OKLAHOMA CITY (AP) Oklahomans will see some state tax cuts in the new year. <br/><br/>When fully implemented, a record tax cut approved by the Oklahoma Legislature will reduce the state's income tax

Friday, December 29th 2006, 4:59 pm

By: News On 6

OKLAHOMA CITY (AP) Oklahomans will see some state tax cuts in the new year.

When fully implemented, a record tax cut approved by the Oklahoma Legislature will reduce the state's income tax rate to 5.25 percent, eliminate the inheritance tax and raise the state's standard deduction to the federal level.

The cuts will eventually cost the state more than $620 million a year in lost revenue.

The income tax will fall from 6.25 percent to 5.65 percent for 2007. By the end of the four-year phase-in, the rate will drop to 5.25 percent if the economy continues to grow.

In 2007, Oklahoma's standard deduction will rise to $5,500, from $3,000, for those who are married, filing jointly and do not itemize their taxes. At the end of the four-year phase-in, the state's standard deduction is to match the level of the federal standard deduction.

On the estate tax, for deaths that occur on or after January 1, lineal and collateral heirs will be subject to the same tax rate and exemption amount. Eliminating the estate tax will cost about $66 million a year when fully implemented.