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Oklahoma State Taxes: What You’ll Owe in the 2026 Tax Season

Stacey Shepard,

AARP

Published April 10, 2026

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Oklahoma ranks among the top 20 states on the Tax Foundation’s 2026 State Tax Competitiveness Index. In 2025, state lawmakers passed tax legislation that reduced the top income tax rate from 4.75 percent to 4.5 percent and consolidated six income tax brackets into three. Those changes are effective for the 2026 tax year and beyond.

The big picture:

Income tax: 0.25 percent to 4.75 percent. Oklahoma passed legislation changing its income tax structure starting in tax year 2026. For the 2025 tax year, the six-bracket income tax structure remains in place.
Property tax: 0.79 percent of a home’s assessed value, according to the Tax Foundation. Property tax bills vary widely depending on where you live, the value of your home and local millage rates.
Sales tax: The statewide sales tax rate is 4.5 percent. Local governments can add their own sales taxes, bringing the average combined state and local rate to 9.06 percent, according to the Tax Foundation.

How is income taxed in Oklahoma?

For the 2025 tax year, Oklahoma has a graduated individual income tax with six tax brackets:

Does Oklahoma tax Social Security benefits?

No. Any Social Security benefits that were included in your federal adjusted gross income can be subtracted when you calculate your Oklahoma taxable income.

What about pensions or other retirement income?

Oklahoma taxes most retirement income, including withdrawals from private pensions, 401(k)s, 403(b)s and IRAs. However, the state allows a deduction of up to $10,000 per taxpayer per year for income from qualifying retirement plans, as determined by IRS distribution codes. This deduction is available to residents, nonresidents and part-year residents.

U.S. military retirement, railroad retirement benefits are fully deductible. Federal civil service pension (generally from the Civil Service Retirement System and not the Federal Employees Retirement System) that is in lieu of Social Security is 100 percent deductible.

What about investment income?

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Investment income — including interest, dividends, rental income and most capital gains — is generally taxed as ordinary income and is subject to the state’s graduated income tax rates. However, Oklahoma exempts certain federal, state and municipal bonds. Learn more here.

The state also allows a capital gains deduction stemming from the sale of certain Oklahoma-based real estate or business interests held for the required period. To qualify for the deduction, the gain must come from the sale of one of the following:

Real or tangible personal property located in Oklahoma that you owned for at least five years.
Stock or an ownership interest in a business headquartered in Oklahoma that you owned for at least two years.
Property that is part of the sale of all or substantially all of the assets of an Oklahoma-based business that owned the property for at least two years.

How is property taxed in Oklahoma?

The average property tax rate in Oklahoma was 0.79 percent of a home’s assessed value, according to the latest data available from the Tax Foundation. Local property tax rates ranged from a low of 0.34 percent in Pushmataha County to a high of 0.98 percent in Tulsa County. The lowest median property tax paid was $395 in Cimarron County and the highest was $2,394 in Canadian County.

The state has a homestead exemption that reduces the taxable value of a homeowner’s primary residence by $1,000 of assessed value.

What about sales tax and other taxes?

Sales tax: Oklahoma has a sales tax rate of 4.5 percent. Counties and cities can add their own sales taxes, so combined rates vary by location, but they average 9.06 percent, according to the Tax Foundation. A 2024 law eliminated the state sales tax on most “food and food ingredients” and certain “prepared food.” Other prepared foods, alcoholic beverages and dietary supplements remain subject to the full 4.5 percent state sales tax, plus any local taxes. Local sales taxes on groceries still apply. Learn more here, and see a list of what items are and are not subject to state sales tax here.
Gas tax: Oklahoma levies a tax of 19 cents per gallon on gasoline and diesel.
Alcohol and cigarettes: On-premise sales of liquor, wine and beer at a business establishment are subject to a 13.5 percent mixed beverage tax. When alcohol is purchased at a store, sales tax rates apply. Cigarettes are subject to a tax of $2.03 per pack
Motor vehicles: Oklahoma has a 1.25 percent sales tax on vehicles, as well as an additional excise tax. For new vehicles, the excise tax is 3.25 percent. For used vehicles, the excise tax is $20 on the first $1,500 of the cost and 3.25 percent after that.
Medical marijuana: A 7 percent tax is levied on purchases of medical marijuana, in addition to sales tax.

Will my estate or my heirs have to pay inheritance or estate tax?

No. Oklahoma does not have an estate or inheritance tax.

Are there any tax breaks for older residents or individuals with disabilities?

Additional homestead exemption: For 2026, homeowners with a household income of $30,000 or less may qualify for an additional homestead exemption of up to $1,000 of assessed value. Applicants who are 65 and older and have previously qualified for the exemption do not have to reapply each year, unless their income exceeds $30,000.
Valuation freeze: Some homeowners age 65 or older — depending on their income — may qualify to have the taxable value of their home “frozen,” preventing increases due to rising assessments. Contact your county assessor to learn more.
Disabled veterans: Oklahoma provides a full property tax exemption for certain disabled veterans and, in some cases, their surviving spouses. The exemption applies to the full fair cash value of the veteran’s homestead, meaning the qualifying property is entirely exempt from property taxes.

To learn more or to apply for these forms of property tax relief, contact your county assessor’s office.

Is military pay taxed?

Active-duty military pay (including Reserve and National Guard pay) is not subject to Oklahoma income tax.

What is the deadline for filing Oklahoma taxes in 2025?

The deadline to file 2025 tax returns is April 15, 2026.

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