Senate Bill 240 - Income Tax Modifications

• Establishes a flat income tax rate of 2.95% for all individuals beginning January 1, 2014, replacing the previous progressive multi-bracket tax system.

• Eliminates numerous tax preferences for individuals including personal exemptions, standard and itemized deductions, and specific deductions for federal income taxes, military compensation, retirement benefits, and capital gains.

• Prohibits use of various tax credits, exemptions, and adjustments specified in 24 different sections of Oklahoma tax law for taxable years beginning 2014 and later.

• Deletes prior tax rate schedules, methods of computing income tax, and reduces the top individual tax rate from 5.25-5.50% under the previous system to a flat 2.95% rate.

• Effective January 1, 2014, with significant restructuring of Oklahoma's individual income tax base by removing deductions and credits while implementing a single, lower tax rate.