OKLAHOMA CITY — In a move set to reshape the state’s financial future, the Oklahoma Legislature has passed a sweeping tax reform bill aimed at reducing the personal income tax burden while modernizing the state’s tax code. The legislation, House Bill 2764, now awaits Governor Kevin Stitt’s signature.
What House Bill 2764 Means for You
Starting in tax year 2026, Oklahomans will see their top personal income tax rate drop from 4.75% to 4.5%. The bill also simplifies the tax code by consolidating six income tax brackets into just three—making it easier for residents to understand and file their taxes.
But this reform goes beyond immediate relief. House Bill 2764 includes a bold new framework that could eventually eliminate the personal income tax altogether. Using a built-in trigger mechanism, the plan allows for 0.25% reductions when the state’s revenues exceed certain thresholds—ensuring tax cuts are based on real economic growth, not speculation.
Responsible Reform with Built-in Safeguards
While the bill provides a path to a tax-free future, it also includes guardrails to ensure fiscal responsibility. If a revenue failure is declared, any scheduled tax cut is automatically canceled to protect vital public services.
Senate President Pro Tempore Lonnie Paxton (R-Tuttle) called the measure “a smart, responsible step toward long-term tax reform.”
“This plan brings common-sense changes that level the playing field for all Oklahomans,” said Paxton. “It simplifies the system, lowers the burden, and ensures we only cut taxes when we can afford to. We’re maintaining Oklahoma’s commitment to fiscal responsibility while creating a vision for sustainable growth.”
House Speaker Kyle Hilbert (R-Bristow) echoed that sentiment, highlighting the collaborative effort behind the bill.
“This is a major win for taxpayers and for Oklahoma’s future,” Hilbert said. “House Bill 2764 is not just a tax cut—it’s a comprehensive modernization plan. We’ve built in strong protections while empowering our economy to grow.”
Key Features of House Bill 2764
✅ Immediate Tax Relief
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Top personal income tax rate drops from 4.75% to 4.5% starting in 2026.
✅ Simplified Tax Brackets
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Restructures six brackets into three for easier filing and administration.
✅ Performance-Based Reductions
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Additional 0.25% rate cuts triggered when revenues meet certified benchmarks.
✅ Strong Fiscal Safeguards
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Cuts are nullified if a revenue failure is declared, ensuring critical services remain funded.
How the Trigger Framework Works
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Starting in 2026: Each year, if state revenues exceed the base year by 125% of the cost of a 0.25% tax cut, a new reduction is triggered.
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Certification Required: The State Board of Equalization will review and certify revenue conditions each December.
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Built-In Delay: Triggered cuts take effect two years later, allowing time for careful budget planning.
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Automatic Cancellation: Any cut is canceled if revenues fall short before implementation.
With House Bill 2764, Oklahoma is not just trimming taxes—it’s creating a future where tax relief is tied to growth, not guesswork. All eyes now turn to Governor Stitt, who is expected to sign the bill into law in the coming days.
