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Tool | August 2013

State-by-State Guide to Taxes on Retirees

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Oklahoma

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The Bottom Line
Map of Oklahoma

TAX-FRIENDLY

The Sooner State does not tax Social Security benefits or Civil Service Retirement System benefits. In addition, residents of Oklahoma can exclude up to $10,000 per person ($20,000 per couple) of other types of retirement income. Real estate is assessed at 11% to 13.5% of its fair market value. But Oklahoma also has the fifth-highest combined sales tax rate in the nation, at an average of 8.67%.

State Sales Tax

4.5% (prescription drugs are exempt). Cities, towns and counties may levy local sales taxes. The county tax cannot exceed 2%, but some cities have sales taxes that can reach an additional 6.5%.

Income Tax Range

Low: 0.5% (on up to $1,000 of taxable income for single filers and up to $2,000 for married joint filers)

High: 5.25% (on taxable income over $8,700 for single filers and over $15,000 for married joint filers)

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

There's an exclusion of up to $10,000 for qualified private pension income. Total public and private pension exemptions cannot exceed $10,000 per person. The retirement benefits must be received from an employee pension benefit plan, an eligible deferred compensation plan, an IRA, annuity or trust or simplified employee pension under IRC Section 408, an employee annuity, United States Retirement Bonds or lump-sum distributions from a retirement plan.

Civil-service retirees may exclude their retirement benefits received from the Civil Services Retirement System, including survivor benefits, paid in lieu of Social Security to the extent that such benefits are included in federal adjusted gross income. Oklahoma government pensions and civil-service pensions received from the Federal Employees Retirement System (FERS) are included in the $10,000-per-person limit. Military retirees may exclude the greater of 75% of their retirement benefits or $10,000 (but not to exceed the amount included in their federal adjusted gross income).

Property Taxes

Property is assessed at 11% to 13.5% of its market value. Oklahoma offers a homestead exemption for homeowners, which reduces the property's assessed value by $1,000. In most cases, this will result in a tax savings of $80 to $120. If gross household income is $20,000 a year or less and you meet all of the homestead-exemption requirements, you may qualify for an additional $1,000 exemption. As of January 1, 2013, properties that qualify for a homestead exemption have a 3% limit on increases to their fair cash value in any given tax year. Median property tax on the state's median home value of $107,700 is $796, according to the Tax Foundation.

Tax breaks for seniors: A property tax refund worth up to $200 is available if you are 65 or older and have an income of $12,000 or less. Senior citizens below certain income limits may qualify for a valuation freeze on their primary residence, meaning their property tax will not go up just because the value of other homes in the neighborhood go up.

Inheritance and
Estate Taxes

There is no inheritance tax or estate tax.

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