Oklahoma Witnesses Largest Single-Year Tax Cut with State Grocery Tax Elimination
The state grocery tax has been completely eliminated by Governor Kevin Stitt through the signing of a new law.
During the 2023 legislative session, a bill to eliminate the state grocery tax was passed by the House, but the Senate did not take any action on it.
The Oklahoma Legislature has approved a historic tax cut that not only eliminates the state tax but also imposes a moratorium on local grocery and sales taxes, preventing any increases until June 2025.
The House’s version of this tax cut is set to take immediate effect once signed into law, but a recent decision by the Senate on Thursday dropped the emergency clause that would have provided immediate relief.
Pro Tem Treat explained that the decision to forgo the emergency clause was driven by the need for vendors and privately owned grocery stores to adapt their systems, coupled with the tax commission’s requirement to establish rules.
Despite the delay in implementing the tax cut, Speaker of the House Charles McCall (R-Atoka) warned that Oklahomans would face an additional $200 million in costs.
Oklahoma Delays Tax Relief
The impact of the delayed vote resulted in an estimated additional $374 million in taxes for Oklahomans, with an additional $200 million due to the lack of an emergency provision for immediate relief. Senate leadership, however, worked diligently to secure the passage of this legislation after a 332-day wait, offering relief to Oklahomans facing some of the worst inflation in decades.
The state’s revenue is expected to decrease by $418 million with the elimination of the state grocery tax, which Pro Tem Treat highlighted as a means to save Oklahomans $700 per year, approximately $13 per week.
With the proposal passing both the House and Senate, it now awaits the Governor’s signature. Governor Stitt expressed pride in delivering on a promise made since 2019, describing the grocery tax elimination as the largest single-year tax cut in Oklahoma’s history.
Oklahoma, one of five states taxing groceries at the maximum, currently imposes a 4.5% grocery sales tax. Pro Tem Treat, Speaker McCall, and other leaders expressed excitement about fulfilling this long-awaited promise.
The elimination of the state sales tax on groceries represents a significant stride toward improving the financial well-being of Oklahomans and fostering economic growth in the state. However, citizens will have to wait until 90 days after the legislative session adjourns for the year for the elimination to take effect, potentially by the end of August.
While Governor Stitt and Speaker McCall hope for a .25% personal income tax cut this year, Pro Tem Treat clarified that the grocery tax elimination will be the maximum relief Oklahomans will experience this year. Any consideration for a second tax cut would depend on the state’s revenue exceeding current levels.
