Oklahoma has a competitive 4.5% top income tax rate, reduced from 4.75% under House Bill 2764 (signed May 2025, effective tax year 2026), which also consolidated the state's six narrow brackets into three. Social Security is fully exempt. The state sales tax is 4.5% — one of the lowest state rates, though city and county taxes are added on top and vary widely by location. Property taxes average 0.85% effective rate. Oklahoma lets each person exclude up to $10,000 of retirement income (military retirement and federal CSRS benefits are fully excluded). Oil and gas severance taxes fund a significant portion of state operations.
At a glance
Key Facts
State Income Tax
0%–4.5% progressive (3 non-zero brackets); top rate 4.5% applies to income over $7,200 (single) / $14,400 (MFJ); restructured under House Bill 2764 (signed May 2025), effective tax year 2026
Social Security
Fully exempt from Oklahoma income tax regardless of income level
Retirement Exemption
Up to $10,000 per person exempt from Oklahoma income tax on pension, IRA, and other retirement income (no age requirement); military retirement 100% exempt
Sales Tax
4.5% state rate — one of the lowest in the US; city and county taxes are added on top, so combined rates vary widely by location (about 8.4%–9.0% in the five cities listed below); no state tax on groceries (local tax still applies)
Property Tax
0.85% average effective rate; assessed at a county-specific percentage of fair cash value; homestead exemption $1,000 off assessed value
Oil & Gas Severance
Oklahoma levies a gross production tax on oil and gas; significant revenue source; reduced 5% rate for the first 36 months of new wells
Introduction
Oklahoma's tax environment is among the most competitive in the South-Central US, with a top income tax rate of 4.5% (Texas has no income tax, but Oklahoma's overall burden including sales and property taxes competes well). Oklahoma's generous Social Security and retirement income exemptions make it attractive for retirees.
Oklahoma's economy is diversified between oil and gas, agriculture, aerospace and defense, and a growing technology sector (Tulsa has emerged as a significant tech hub with the Tulsa Remote program attracting remote workers from across the country).
Section 01
Oklahoma Income Tax: Brackets, Retirement Exemptions, and Social Security
Oklahoma's income tax uses four bands (a 0% band plus three non-zero brackets) with rates from 0% to 4.5%, restructured under House Bill 2764, signed by Governor Kevin Stitt on May 28, 2025 and effective for tax year 2026:
Oklahoma Income Tax Brackets, Tax Year 2026
Taxable Income (Single)
Rate
$0 – $3,750
0%
$3,750 – $4,900
2.5%
$4,900 – $7,200
3.5%
Above $7,200
4.5%
HB 2764 restructured Oklahoma's previous six narrow brackets (0.25%–4.75%) into this simpler three-bracket-plus-zero-band structure, cutting the top rate from 4.75% to 4.5%. The 0% first bracket provides meaningful relief to lower earners. Because the top 4.5% bracket begins at just $7,200 of taxable income, most working Oklahomans pay the 4.5% marginal rate on the majority of their income above the standard deduction.
Oklahoma Retirement Income Exemptions
Oklahoma provides multiple retirement income exclusions:
Social Security: 100% exempt for all filers at all income levels
Retirement income: Up to $10,000 per person exempt from pension, IRA, 401(k), and annuity income (no age requirement); qualified railroad retirement benefits are excluded in full
Married couple: Both spouses can claim $10,000 each = up to $20,000 per couple exempt
Federal civil service pension: CSRS benefits are fully exempt; other federal and Oklahoma government pensions (including FERS) qualify only for the $10,000 exclusion
Military retirement: Exempt from Oklahoma income tax
Oklahoma Tulsa Remote Program
The Tulsa Remote program (funded by the George Kaiser Family Foundation) offered $10,000 to remote workers who relocated to Tulsa, Oklahoma. The program has attracted thousands of remote workers from high-cost cities. Oklahoma's relatively low income tax (4.5% vs California's 13.3% or New York's 10.9%) is a meaningful financial incentive for relocated remote workers.
Section 02
Oklahoma Sales Tax, Property Tax, and Oil Severance Taxes
Oklahoma's 4.5% state sales tax rate is one of the lowest in the US. However, cities and counties add local taxes on top, so combined rates vary widely by location.
Combined Sales Tax Rates
City
State Rate
Local Rate
Total Rate
Oklahoma City
4.5%
4.125%
8.625%
Tulsa
4.5%
4.017%
8.517%
Norman
4.5%
4.25%
8.75%
Broken Arrow
4.5%
3.917%
8.417%
Lawton
4.5%
4.5%
9%
Local rates combine the city rate and the county rate (for example, Norman 4.125% city + 0.125% Cleveland County; Lawton 4.125% city + 0.375% Comanche County; Tulsa 3.65% city + 0.367% Tulsa County). These figures are for the main city and county area as published in the Oklahoma Tax Commission's 2026 rate charts; parts of some cities lie in other counties or special districts and are taxed at different rates, so check the exact rate for your address.
Since August 29, 2024, Oklahoma has exempted food and food ingredients from the state sales tax, but local sales taxes still apply to groceries, and prepared food remains subject to the full 4.5% state rate.
Oklahoma Property Tax
Oklahoma's 0.85% average effective property tax rate is below the national average. Oklahoma assesses property at a county-specific percentage of fair cash value. At an illustrative 11% ratio, a $300,000 home has an assessed value of $33,000 before exemptions; the annual tax is that assessed value times your local millage rate (for example, at 80 mills, or 8%, about $2,640 a year, in line with the roughly 0.85% average effective rate). Oklahoma's $1,000 homestead exemption comes off assessed value, so it saves $1,000 times your millage rate (about $80 a year at 80 mills) — relatively modest.
Oklahoma Oil and Gas Gross Production Tax
Oklahoma imposes a gross production tax on oil and gas extracted from Oklahoma wells: 7% for both oil and natural gas, with a reduced 5% rate applying for the first 36 months of production from qualifying new wells (incentive rate). Oil and gas taxes are a significant revenue source for the Oklahoma state budget and help offset the impact of income tax reductions on state revenue.
Oklahoma's oil and gas income, retirement exemptions, and multi-jurisdictional sales tax complexity benefit from professional guidance. TaxHub connects you with CPAs who understand Oklahoma tax law.
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Oklahoma has four income tax bands for 2026: 0% (up to $3,750), 2.5% ($3,750–$4,900), 3.5% ($4,900–$7,200), and 4.5% (above $7,200) for single filers, doubled for married filing jointly. House Bill 2764, signed May 2025 and effective tax year 2026, restructured Oklahoma's previous six narrow brackets (0.25%–4.75%) into this simpler system, also reducing the top rate from 4.75% to 4.5%. Because the 4.5% bracket begins at only $7,200 of taxable income, most working Oklahomans pay the 4.5% marginal rate on most of their income above the standard deduction.
Q
Does Oklahoma tax Social Security and retirement income?
Oklahoma fully exempts Social Security benefits from state income tax for all income levels. Oklahoma also lets each person exclude up to $10,000 of pension, IRA, 401(k), and annuity income, with no age requirement. Married couples can each claim the $10,000 exclusion, totalling $20,000/couple. Military retirement pay and federal CSRS benefits are fully exempt. Oklahoma ranks among the better states for retirement income tax treatment.
Q
What is Oklahoma's sales tax rate?
Oklahoma's state sales tax rate is 4.5% — one of the lowest state rates in the US. However, cities and counties add substantial local taxes, with combined rates of about 8.4% (Broken Arrow, Tulsa County) to 9.0% (Lawton) in the cities we checked, and varying by county and city elsewhere. Oklahoma exempts groceries from the state sales tax (since August 29, 2024), but local sales taxes still apply to them.
Q
How does Oklahoma compare to Texas for taxes?
Texas has no state income tax, while Oklahoma's top rate is 4.5%. For a single filer with $100,000 of Oklahoma taxable income, Oklahoma income tax is approximately $4,285 (4.29% effective rate on that taxable amount) under the HB 2764 brackets. However, Texas property taxes (1.40% effective) are about 65% higher than Oklahoma's (0.85%). On a $300,000 home, Texas costs approximately $1,650 more per year in property tax vs Oklahoma. The combined income + property tax burden often makes Oklahoma comparable to Texas for middle-income homeowners, and better for high-income renters.
Disclaimer:This guide provides general tax information for educational purposes only. Oklahoma income tax rates and exemptions are subject to legislative change. Always consult a qualified Oklahoma tax professional for advice specific to your situation.