Why You’ll Still Pay Oklahoma Grocery Tax

Oklahoma is finally eliminating its 4.5% state tax on groceries, an initiative that took two years to achieve. State lawmakers estimate the tax cut will save each family an average of $648 per year. However, other estimates range from savings of $125 a year for a family earning $40,000 to high-earning households saving an average of $408 per year.

Gov. Kevin Stitt who signed House Bill 1955 into law earlier this year, expressed pride in the bipartisan effort. "Oklahomans have waited for this day for years, and I'm proud to be the Governor that Oklahomans chose to eliminate the state portion of the grocery tax."

However, while the grocery tax cut will save Oklahomans money, shoppers will still pay sales tax when they visit the grocery store, some more than others. That’s because not all food items are covered under the Oklahoma tax cut, and local taxes can vary dramatically depending on which part of the state you shop in.

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The grocery tax cuts become effective on August 29, 2024. So, here's more of what you need to know.

Oklahoma grocery tax cut

Oklahoma’s grocery tax cut becomes effective Thursday, August 29, 2024. So, families should see a change in their grocery bills soon.

But it's important to note that the tax cut only applies to the state’s 4.5% portion of sales tax. So, Oklahomans will still pay local sales tax on all types of groceries, which can reach as high as 7% in some areas of the state. That means some residents will still pay $70 in sales taxes for every $1,000 spent on groceries once the law takes effect. 

Because the tax cut doesn’t apply to local taxes, residents might pay even more grocery taxes in the future, if counties and cities raise their sales tax rates. However, the new law prohibits them from doing so until at least July 1, 2025.

What groceries will be exempt in Oklahoma?

Not all grocery items will be exempt from Oklahoma’s 4.5% state sales tax. 

• Ready-to-eat prepared foods will not be tax-exempt.
• Oklahoma’s 4.5% state tax will still apply to grocery deli items.
• Heated foods will still be taxed at the current rate. 

So, families who routinely purchase these types of items might not notice savings as significant as families who don’t.

Oklahoma income tax cut 

Oklahoma was one of only about a dozen states that still tax groceries. Now that the state’s grocery tax is eliminated, Gov. Stitt is turning his attention to eliminating Oklahoma’s income tax. Nearby states have already taken steps to reduce income taxes, and bordering state, Texas, imposes no individual income taxes.

When speaking of the state’s income tax, Stitt said, “We think we need to put Oklahoma on a path to zero” and that if Oklahoma tax cuts don’t keep up with other states, it will get “left behind.”

Since passing the grocery tax bill, Oklahoma House lawmakers advanced two bills that would cut state income taxes, to eliminate them over time. 

Related Content

• The 'Food Tax': Grocery Tax by State
• What Does it Cost to Be Middle-Class?
• Oklahoma State Tax Guide