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Oklahoma Retirement Tax Friendliness

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Overview of Oklahoma Retirement Tax Friendliness

Oklahoma provides a full exemption for Social Security retirement benefits. It also provides a $10,000 deduction toward other types of retirement income, such as money from a 401(k) or a pension. Although sales taxes in Oklahoma are high, property taxes are fairly low.

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Oklahoma Retirement Taxes

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Oklahoma has one of the lowest costs of living of any U.S. state, making it a great choice for an affordable retirement.

The state’s tax system is likewise friendly toward budget-conscious retirees. Oklahoma provides a full exemption for Social Security retirement benefits. It also provides a $10,000 deduction toward other types of retirement income such as income from a 401(k) or a pension. Although sales taxes in Oklahoma are high, property taxes are pretty cheap.

A financial advisor can help you plan for retirement and other financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Is Oklahoma tax-friendly for retirees?

The Sooner State exempts Social Security from taxation, while providing a deduction of $10,000 across all other types of retirement income. For those with retirement income in excess of that deduction or work income, tax rates range from 0.5% to 5%.

Oklahoma has low property taxes, with most homeowners paying less than $1,300 annually. It has no estate or inheritance tax. The only tax that's steeper in Oklahoma than in the rest of the country is the sales tax. On average, it is nearly 9% in most of the state.

Is Social Security taxable in Oklahoma?

Any Social Security retirement benefits you receive while living in Oklahoma will not be subject to the state income tax. You can subtract Social Security benefits from your state income taxes by filing Schedule 511-A. Some Social Security benefits may still be taxable federally, however.

Are other forms of retirement income taxable in Oklahoma?

They are, but taxpayers age 65 or older can claim a $10,000 deduction on all retirement income. Deductible income sources include IRAs, 401(k)s, 403(b)s, 457(b)s and public and company pensions. To use the deduction, you must file Oklahoma’s Schedule 511-A.

The $10,000 retirement income deduction for seniors in Oklahoma applies to the total of all income from any of those sources. If total retirement income (not including Social Security benefits) exceeds $10,000, the remainder is subject to the Oklahoma income tax. The table below shows brackets and rates for the income tax in Oklahoma.

Income Tax Brackets

Single Filers
Oklahoma Taxable IncomeRate
$0 - $1,0000.25%
$1,000 - $2,5000.75%
$2,500 - $3,7501.75%
$3,750 - $4,9002.75%
$4,900 - $7,2003.75%
$7,200+4.75%
Married, Filing Jointly
Oklahoma Taxable IncomeRate
$0 - $2,0000.25%
$2,000 - $5,0000.75%
$5,000 - $7,5001.75%
$7,500 - $9,8002.75%
$9,800 - $12,2003.75%
$12,200+4.75%
Married, Filing Separately
Oklahoma Taxable IncomeRate
$0 - $1,0000.25%
$1,000 - $2,5000.75%
$2,500 - $3,7501.75%
$3,750 - $4,9002.75%
$4,900 - $7,2003.75%
$7,200+4.75%
Head of Household
Oklahoma Taxable IncomeRate
$0 - $2,0000.25%
$2,000 - $5,0000.75%
$5,000 - $7,5001.75%
$7,500 - $9,8002.75%
$9,800 - $12,2003.75%
$12,200+4.75%

How high are property taxes in Oklahoma?

Property taxes in Oklahoma are quite low. The median annual property tax payment in Oklahoma is just $1,424, but the median in most counties is less than $1,000. Those taxes are well below the national median payment of $2,795. Low property taxes are partially a result of relatively low home values in Oklahoma, but property tax rates are also fairly low. The average effective rate across the state is 0.85%.

What is the Oklahoma senior valuation freeze?

Seniors in Oklahoma can put a freeze on tax valuation increases if they meet certain income requirements. To be eligible, you must own and occupy your home, be at least 65 years old and have a household income of no more than $73,200 for calendar year 2022.

Homeowners who receive the freeze are exempt from any increases in their property value. This can lead to significant savings over time. If, for example, your home value increases by 2% every year, after 10 years your property taxes will be about 22% lower with the freeze than they would be without it.

Another form of property tax relief available to seniors and other homeowners in Oklahoma is the homestead exemption. This exemption knocks $1,000 off the taxable value of any owner-occupied property.

How high are sales taxes in Oklahoma?

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Although the statewide sales tax rate is just 4.5%, which is below average, local city and county rates can be as high as 7%. They average about 4.45%, so a typical sales tax rate you will pay in Oklahoma is close to 9%.

Unfortunately, unlike many other states, Oklahoma’s sales tax applies to groceries - though low-income households can claim a tax credit to offset part of their food sales tax cost. At the same time, exemptions for clothing and prescription drugs should help lower the sales tax cost for retirees in Oklahoma.

What other Oklahoma taxes should I be concerned about?

Aside from income, property and sales taxes, there are no taxes in Oklahoma that will significantly affect the budgets of most seniors. The state does have a gas tax, along with sin taxes on cigarettes and alcohol, but these are relatively low compared to those of other states. Additionally, they are already factored into the purchase price of these goods).

There is no estate tax in Oklahoma.