Are you starting a business or looking to expand in Oklahoma? In order to help your business succeed, the Sooner State provides a range of tax incentives, from aiding with startup costs to bringing in new hires and assisting small enterprises. In this blog post, we’ll look at the 7 must-know tax breaks available in Oklahoma for 2024, providing a clear road map for navigating these programs and selecting the ones that best suit your specific business goals. You can set your Oklahoma business to achieve long-term success with careful planning and the right incentives.
A powerful program designed to attract more companies in high growth industries, the 21st Century Quality Jobs Program provides up to 10% of the taxable payroll of new jobs brought in to Oklahoma to be paid in cash on a quarterly basis. The program lasts up to 10 years and also requires the applicant to create a minimum of 10 New Direct Jobs. This program is a great fit for companies that employ outside of Oklahoma but could be eyeing the Sooner State for an expansion. It could also be valuable for business owners inside of Oklahoma looking for a tax incentive to start a business in one of the qualifying industries. For more information check out the Oklahoma Commerce website.
This longstanding program is a watered down version of the 21st Century Quality Jobs Program. This program provides a quarterly cash payment to qualified companies of up to 5% of new taxable payroll. If you are looking specifically for tax incentives for oil and gas or manufacturing businesses, the Quality Jobs Program could be for you. Manufacturing and oil and gas firms made up a combined 63.9% of the generated rebates between 2011 and 2018 (OK Policy)
This is a sister program to the Quality Jobs Program which targets employers with less than 500 employees. Specifically, to qualify for up to 5% of new taxable payroll for up to 7 years the payrolls must be at least 110% of the average wage of the county rather than the 300% required under the 21st Century Quality Jobs Program. In addition, companies must attain 35% out-of-state sales during the first two years and 60% thereafter. This program is a powerful incentive for small businesses looking to expand quickly but keep their corporate headquarters in the Sooner State.
This tax credit offers 1% per year of investment in qualified property or a credit of $500 per year per new job to manufacturers. This credit is offered only to companies engaged in manufacturing, processing, or aircraft maintenance and is valid over 5 years. The credit is doubled for applicants inside of an Enterprise Zone. The 1% of per year investment in qualified depreciable property may not sound like much, but over 5 years it certainly helps to alleviate the high cost of building out your manufacturing setup. As of 2010, this tax credit can be combined with the Quality Jobs Program for additional value.
Pull together the supporting documents
Learn more about each program on the Oklahoma Commerce site
The SIDE credit applies specifically to the construction of new or existing facilities at rural industrial parks. As of Q4 2023, there is still $3,202,446.60 available in SIDE Act funds for applicants to claim so if this sounds like your business, you need to check it out. According to Oklahoma Commerce, the industrial park or economic development zone must be located in a county with a population less than 100,000 to qualify. Additional, any location adjacent to a terminal, switching, or class II or III railroad may also be able to qualify. Learn more about the SIDE Act at the Oklahoma Commerce website.
The OIEP incentive program makes monthly cash payments in the form of payroll tax rebates to help companies grow and offset the cost of capital expenditures. This program makes $15 million in funding available to qualifying companies and supports a broad range of industries. The focus of the OIEP is to assist companies bringing in new product development or increasing their capacity in an effort to diversify the state’s economy. There is a list of requirements for eligibility that include being a “for-profit” business entity, the project in question must require a minimum capital expenditure of at least $50,000, and must currently have a minimum payroll at the project facility of at least $625,000 per year. Other requirements can be found here.
Residents and businesses in Oklahoma also get access to a handful of solar tax credits including the Federal Solar Investment Tax Credit (ITC). The ITC provides a 30% credit on the entire cost of a solar power system. There are a handful of local incentives such as net metering that could be available to you depending on certain qualifications.
There are many other tax credits and incentives available to residents and businesses in Oklahoma, those listed above are just a few of the more impressive ones. You can learn more about the mentioned incentives through the Oklahoma Commerce website or through our comprehensive blog post on Oklahoma’s Tax Credits and Incentives.
