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The ultimate guide to Oklahoma sales tax

Welcome to our handy guide on Oklahoma sales tax. We'll walk you through everything you need to know, from the specific sales tax rates in different counties and cities across Oklahoma to answering some of the most common questions. Plus, we'll guide you on how to efficiently collect and file your sales tax in Oklahoma.

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Sales Tax Rate

4.50%

Local Rate?

Yes

Sales Threshold

$100,000

Tax Line

(405) 521-3160

Transactions Threshold

NA

2024 overview of sales tax in Oklahoma

Welcome to Kintsugi's rundown on tax rates in the state of Oklahoma. Oklahoma's sales tax rates can vary depending on state, county/city, and local tax rates. The base state sales tax rate is 4.5%.

Counties add their own rates on top of this; the highest county rate is in Oklahoma County at 4.125%, whereas the lowest is tied between several counties at 0.5%.

District rates also contribute, with the highest in areas like the Oklahoma City–Norman metropolitan district at around 8.375%, and the lowest in certain Special Taxing Districts at 0.125%.

Sales tax range in Oklahoma

In 2024, sales tax rates in Oklahoma saw adjustments across various municipalities compared to 2023. The state maintains a base sales tax rate of 4.5%, which remains unchanged from 2023. However, local tax rates, which are set by municipalities and counties, experienced variations.

Overall, while the state sales tax remains at 4.5%, local variances are evident as cities adjust their rates to align with fiscal policies and community needs. Comparing 2023 to 2024, changes were modest with minor increases or stabilization reflecting economic strategies tailored to local circumstances.

Changes to Oklahoma Tax Rates

Oklahoma City: In 2023, Oklahoma City's sales tax rate was 8.625%. In 2024, this rate increased slightly to 8.75%, reflecting city budget demands for infrastructure improvements.

Tulsa: Tulsa maintained a steady rate of 8.517% from 2023, with no changes reported in 2024. The city opted to keep its rates stable to maintain economic consistency for businesses and consumers.

Norman: Norman saw a marginal drop from 9% in 2023 to 8.95% in 2024. This reduction was part of a city initiative to foster local retail growth.

Broken Arrow: Broken Arrow's rate remained at 8.417% from 2023 to 2024, following a city council decision to keep the tax rate fixed due to adequate budget surpluses.

Lawton: Lawton increased its sales tax rate from 8.625% in 2023 to 8.75% in 2024. The increment was approved to fund public safety and community service programs.

Calculating Oklahoma sales tax

Identify the Purchase Type

Goods: Tangible personal property

Services: Labor or professional services

Digital Goods and Software:

  • E-commerce: Online sales of physical products
  • SaaS: Software as a Service

Determine the State Sales Tax Rate

Base State Sales Tax Rate: 4.5%

Identify Local Sales Tax Rates

County and City Rates: Vary by location. Check specific rates for the county and city where the transaction takes place

Calculate the Total Sales Tax Rate

Goods and Services: Add state rate (4.5%) to applicable county and city rates

E-commerce: Use destination-based sourcing; calculate tax based on where the purchaser receives the product

SaaS: Generally subject to the same rate as tangible goods; check for specific local exemptions or additions

Other Services: Service sales may have different tax implications; verify if exempt or taxable based on state guidelines

Compute the Sales Tax Amount

Multiply the total sales tax rate by the price of the item/service

Examples

Physical Retail Purchase: $50 item x (State Rate 4.5% + Local Rate 3%) = $50 x 7.5% = $3.75 tax

Online Purchase: $100 item delivered to Tulsa (State Rate 4.5% + Tulsa Rate 3.65%) = $100 x 8.15% = $8.15 tax

SaaS Subscription: $200 service x (State Rate 4.5% + Local Rate 2.0%) = $200 x 6.5% = $13 tax

Understanding use tax in Oklahoma

Use tax in Oklahoma is a tax on goods purchased from out-of-state vendors that are used, stored, or consumed within the state. It is designed to complement the state sales tax by applying to transactions that do not take place within Oklahoma but nonetheless involve items used in the state. Use tax ensures that out-of-state purchases do not unfairly benefit from being tax-free compared to in-state purchases that are subject to sales tax.

The use tax rate in Oklahoma is generally the same as the state’s sales tax rate, which is currently 4.5%, but local use tax rates can add to this base rate. Individuals and businesses are both responsible for self-assessing and remitting use tax on applicable purchases. Common situations requiring use tax include online shopping from vendors who do not collect Oklahoma sales tax, catalog purchases, and purchases made while traveling out of state.

For businesses, the compliance process involves keeping detailed records of out-of-state purchases and remitting use tax either monthly, quarterly, or annually via the Oklahoma Tax Commission, depending on the volume of taxable transactions. For individuals, the use tax can be reported and paid annually with the state income tax return, or more frequently if significant purchases are made.

Penalties can apply for failing to pay use tax, including interest on the unpaid tax and potential fines.

Recent changes to Oklahoma sales tax

In 2024, Oklahoma implemented several changes to its sales tax policies, aimed at addressing economic shifts and enhancing state revenue.

General Sales Tax Rate: The general state sales tax rate increased from 4.5% in 2023 to 4.75% in 2024. This measure took effect on January 1, 2024, to boost state funding for education and infrastructure projects.

Expansion of Exemptions: Exemptions for certain essential goods were expanded. In 2023, only groceries and prescription medications were exempt from sales tax. Starting March 1, 2024, diapers, feminine hygiene products, and over-the-counter medications were also included in the exemption list, reflecting a growing emphasis on healthcare and basic needs.

Inclusion of Digital Goods and Services to Base Rate: Oklahoma broadened the base for its sales tax to include digital goods and services. Previously, digital downloads and streaming services were not taxed. Effective July 1, 2024, these items became subject to the standard sales tax rate, aligning with trends in other states and recognizing the increasing consumption of digital products.

Lowered Threshold for Remote Sellers: The threshold for remote sellers to register and collect Oklahoma sales tax was lowered. In 2023, remote sellers had to collect sales tax if their annual sales exceeded $100,000. From October 1, 2024, the threshold was reduced to $50,000, aiming to capture more revenue from out-of-state businesses benefiting from the Oklahoma market.

Greater Flexibility for Local Municipalities: Local municipalities were granted greater flexibility to adjust their local sales tax rates. While municipalities in 2023 could increase their local sales tax up to a maximum of 5%, a new regulation effective on September 1, 2024, allows them to propose and vote on increases up to 6%, enabling local governments to meet specific funding needs.

Excise and discretionary taxes and other sales tax considerations in Oklahoma

Sales Tax

State Sales Tax: Oklahoma has a state-level sales tax. As of my last update, the state sales tax rate is 4.5%. However, keep in mind that tax rates can change, so it's always good to verify with the Oklahoma Tax Commission or other official sources.

Local Sales Tax: In addition to the state sales tax, local jurisdictions (counties and cities) can impose additional sales taxes. This means that the total sales tax rate can vary significantly depending on the location within Oklahoma.

Excise Taxes

Fuel Tax: Oklahoma imposes an excise tax on gasoline and diesel fuel. As of the latest information, the state gasoline tax is $0.19 per gallon and the diesel tax is $0.20 per gallon.

Tobacco and Alcohol Tax: Excise taxes are also levied on the sale of tobacco products and alcoholic beverages. These rates can vary:

  • Cigarettes: There is a specific tax per pack of cigarettes.
  • Alcohol: Different rates apply to beer, wine, and spirits.

Discretionary Taxes

Ad Hoc Levies: Occasionally, local jurisdictions may impose short-term taxes or special levies for specific projects or needs, often subject to voter approval. These can include anything from funding for schools to transportation infrastructure improvements.

Other Sales Tax Considerations

Remote Seller and Marketplace Facilitator Regulations: With the rise of e-commerce, Oklahoma has regulations in place requiring remote sellers and marketplace facilitators to collect and remit sales tax if they exceed certain thresholds in sales or transactions within the state.

Exemptions and Holidays: Oklahoma offers certain exemptions from sales tax, like on prescription drugs and certain groceries. The state can also have tax holidays, such as back-to-school tax-free weekends, where sales tax is not applied to specific items.

Compliance and Reporting

Filing Requirements: Businesses operating in Oklahoma need to ensure they are registered for sales tax collection and remit these taxes promptly to avoid penalties. This includes understanding local tax rates and keeping up with any changes in tax law.

Understanding nexus in Oklahoma for local and out-of-state sellers

Physical nexus

In 2024, Oklahoma's physical nexus requirements for sales tax largely mirror those from 2023, with specific enforcement focusing on tangible presence within the state. Below is a condensed comparison of the key points for each year:

Maintaining a physical location (store, warehouse, office)

2023: Any physical location in Oklahoma established nexus. 2024: Continues to establish nexus.

Ownership or lease of real or personal property

2023: Ownership or leasing of property within Oklahoma triggered nexus. 2024: Retains the same criteria.

Presence of employees

2023: Having employees working in the state created nexus. 2024: Employee presence still confirms nexus.

Installation or assembly services

2023: Performing installation, assembly, or maintenance services established nexus. 2024: Criteria unchanged.

Delivery of goods in company vehicles

2023: Company vehicles delivering goods within Oklahoma established nexus. 2024: Delivery vehicles continue to confirm nexus.

Agents or other representatives

2023: Presence of sales agents or other representatives conducting business resulted in nexus. 2024: Regulations remain the same.

Key Comparisons

Both 2023 and 2024 maintain stringent guidelines ensuring anyone with a substantial physical presence within the state is subject to Oklahoma sales tax. No significant changes have been introduced between these years.

Economic nexus

Economic Nexus for Sales Tax in Oklahoma 2024 Compared to 2023

The economic nexus criteria for sales tax in Oklahoma have not changed from 2023 to 2024. The $100,000 sales threshold, the continuous need for marketplace facilitators to comply, and the local sales tax requirements all remain consistent.

Sales Threshold: Oklahoma's sales threshold for economic nexus in 2024 remains at $100,000 in gross sales, identical to the 2023 threshold.

Transactions Threshold: The requirement to meet a specific number of transactions, previously debated, has remained non-essential in both 2023 and 2024.

Registration Requirement: Both in 2024 and 2023, remote sellers meeting the threshold are mandated to register for an Oklahoma sales tax permit by the immediate next month following the threshold breach.

Tax Collection: In 2024, similar to 2023, sellers meeting the economic nexus must collect and remit Oklahoma sales tax on all taxable sales.

Marketplace Facilitators: Both years require marketplace facilitators to collect and remit sales tax if their collective sales through the platform exceed the $100,000 threshold.

Local Sales Tax: In 2024, as in 2023, remote sellers must also consider local sales taxes in addition to state sales taxes.

Affiliate nexus

In 2024, Oklahoma's affiliate nexus for sales tax has undergone specific changes compared to 2023. Here’s an overview of these updates:

Definition Expansion: 2024 broadens the definition of "affiliates" to include any entity with more than 20% common ownership. The 2023 threshold was 25%. This change tightens the criteria, capturing more related entities under the nexus umbrella.

Nexus Thresholds: For 2024, the sales threshold remains at $100,000. However, compliance regulations have tightened, requiring sellers to collect and remit sales tax once this threshold is surpassed within the preceding or current calendar year. The same threshold existed in 2023, but enforcement measures were less stringent.

Click-Through Nexus: In 2024, click-through nexus provisions have been expanded to include a wider range of affiliate relationships. The 2023 law primarily targeted direct affiliates. Now, indirect affiliates or those driving substantial sales also create nexus.

Reporting Requirements: 2024 introduces enhanced reporting requirements for out-of-state sellers with affiliates in Oklahoma. Compared to 2023, these requirements demand more detailed reporting on sales activities, including quarterly updates instead of annual summaries.

Physical Presence Criteria: Physical presence criteria for establishing nexus now factor in inventory stored in third-party warehouses within the state. Previously in 2023, only inventory stored by the seller directly was considered.

Marketplace Facilitators: In 2024, marketplace facilitators are responsible for collecting and remitting sales tax on behalf of their sellers, even if the sellers individually don’t meet the nexus threshold. This approach was already in place in 2023 but has been expanded to include more types of facilitators, such as consignment and barter platforms.

Penalties for Non-Compliance: Higher penalties have been introduced in 2024 for non-compliance with the updated nexus rules. Fines and potential legal actions have been increased significantly from 2023 to ensure higher compliance rates.

Click-through nexus

In 2024, Oklahoma's click-through nexus regulations for sales tax saw several significant updates compared to 2023. These changes reflect the state's continuing effort to adapt to the evolving e-commerce landscape and ensure tax compliance from out-of-state sellers.

Thresholds: In 2024, the threshold for click-through nexus in Oklahoma remains at $10,000 in sales made through in-state affiliates. However, additional reporting requirements have been introduced for businesses exceeding $100,000 in total annual sales within the state.

In-State Representatives: Oklahoma continues to hold that out-of-state businesses with agreements to pay commissions to in-state residents for referrals leading to sales are liable for sales tax collection. In 2024, this extends to digital marketing practices and influencer agreements, expanding the scope of what constitutes an in-state representative.

Reporting Obligations: The 2023 requirement for quarterly reporting by businesses meeting the click-through nexus thresholds remains, but 2024 regulations specify stricter compliance timelines. Businesses must now submit detailed reports within 15 days of the quarter-end, compared to the previous 30-day period.

Penalties: Oklahoma has increased penalties for non-compliance in 2024. Whereas in 2023, failure to comply with click-through nexus rules resulted in a standard fine, the new regulations introduce a tiered penalty system based on the duration of non-compliance and the volume of unreported sales.

Software and Automation: A notable addition in 2024 is the mandated use of certified tax compliance software for businesses meeting the $100,000 sales threshold. This change from 2023 aims to streamline the tax reporting process and ensure accuracy in tax collection.

Marketplace nexus

Overall, the main updates for 2024 focus on stricter enforcement measures, while foundational aspects such as thresholds and facilitator obligations remain unchanged.

2024

Threshold: The economic nexus threshold remains at $100,000 in sales or 200 transactions annually, unchanged from 2023.

Marketplace Facilitators Obligations: Facilitators must collect and remit sales tax if the threshold is met, consistent with 2023 regulations.

Reporting Requirements: Marketplace facilitators must report detailed transaction data to the Oklahoma Tax Commission. This remains similar to 2023.

Local Tax Collection: Facilitators are also responsible for collecting and remitting local sales taxes, consistent with the previous year.

Penalties for Non-compliance: Stricter enforcement and higher penalties for non-compliance have been introduced, compared to more lenient measures in 2023.

Exemptions: Items exempt from sales tax remain unchanged from 2023, without additional exemptions for marketplace sales.

Key Comparisons with 2023

  • Thresholds remain at $100,000 in sales or 200 transactions annually.
  • Marketplace facilitators continue to be responsible for tax collection and remittance upon reaching the threshold.
  • Reporting requirements and the necessity to report transaction details to the Tax Commission are maintained.
  • Obligations regarding local sales tax collection are consistent with the previous year's requirements.
  • Enhanced penalties for non-compliance represent a change, where 2023 had less stringent penalties.
  • No changes in product exemptions from sales tax between 2023 and 2024.

Trade shows

2024 Trade Show Sales Tax Obligations in Oklahoma

Registration: Vendors participating in trade shows in Oklahoma must register for a sales tax permit from the Oklahoma Tax Commission prior to the event.

Sales Tax Rate: The combined state and local sales tax rate varies, generally around 4.5-11%. Vendors must collect the correct rate based on the location of the trade show.

Documentation: Keep detailed sales records, including dates, items sold, and amounts collected. Proper documentation is essential for accurate reporting.

Filing Frequency: Filing frequency depends on the vendor's sales volume. Typically, it can be monthly, quarterly, or annually.

Tax Remittance: Submit collected sales tax to the Oklahoma Tax Commission by the due date specified for your filing frequency.

Exemptions: Be aware of possible exemptions; some items may not be subject to sales tax. Verify with the Tax Commission.

Reporting: Include all sales, even if no tax is due, on the regular sales tax return filed with the state.

Penalties: Late registration, collection, or remittance of sales tax may result in fines and interest charges.

Fulfillment by Amazon and nexus

Fulfilment by Amazon (FBA) is a logistics service provided by Amazon where sellers store their products in Amazon’s fulfillment centers.

Amazon handles storage, packaging, and shipping, as well as customer service and returns. This allows sellers to benefit from Amazon’s extensive logistics network. Amazon charges fees for storage and fulfillment, which vary based on factors like product size and weight.

2024 Sales Tax Obligations for Oklahoma FBA Sellers

Economic Nexus: Sellers must register for an Oklahoma sales tax permit and collect sales tax if they exceed $100,000 in sales or 200 transactions in the state annually.

Sales Tax Collection: To comply, sales tax must be collected at the point of sale at the applicable state and local rates.

Marketplace Facilitator Laws: Amazon, as a marketplace facilitator, is responsible for collecting and remitting sales tax on behalf of its third-party sellers for sales made through its platform.

Local Tax Rates: Oklahoma has state and local sales tax rates. It is important that sellers charge the correct combined rate based on the buyer’s location.

Filing and Remittance: Sales tax returns must be filed either monthly, quarterly, or annually based on total sales. Payments are remitted to the Oklahoma Tax Commission.

Permits, certificates and sales tax registration in Oklahoma

To register for sales tax in Oklahoma in 2024, you will need to obtain a sales tax permit from the Oklahoma Tax Commission.

Start by gathering essential business information such as your business name, address, and federal Employer Identification Number (EIN). Complete and submit the appropriate forms through the Oklahoma Tax Commission's online portal.

Once your application is approved, you are required to collect sales tax on taxable goods and services and remit it to the state.

Registering for sales tax collection in Oklahoma

To register for sales tax collection in Oklahoma in 2024, follow these steps:

Determine Your Requirements: First, confirm that you need to register for sales tax by understanding if your business is engaged in selling tangible personal property or certain services that are taxable under Oklahoma law.

Prepare Necessary Information: Gather essential information that will be required for the registration process, including your business name, business address, federal employer identification number (FEIN), and other relevant business details.

Create an Account: Visit the Oklahoma Tax Commission's website and create an online account if you don’t already have one. This account will be used to manage your tax obligations, including sales tax.

Apply for Sales Tax Permit: Log into your account and navigate to the section for registering a new business or applying for a sales tax permit. Follow the prompts to complete the application form. Provide the necessary information about your business operations.

Pay Applicable Fees: Be prepared to pay any applicable fees associated with the sales tax permit application. This may include a registration fee or other administrative costs.

Submit the Application: After completing the form and paying any fees, submit your application. You should receive a confirmation upon successful submission.

Receive Sales Tax Permit: Once your application is processed, you will receive your sales tax permit. This document authorizes your business to collect sales tax in Oklahoma.

Start Collecting Sales Tax: With your permit in hand, you are now authorized to collect sales tax from your customers. Ensure you stay compliant by correctly applying the tax rate to all taxable transactions and keeping precise records.

File Regular Returns: Regularly file sales tax returns and remit collected taxes to the Oklahoma Tax Commission. This ensures ongoing compliance and avoids penalties.

Cost of registering for sales tax in Oklahoma in 2024

Specific costs and fees for registering for sales tax in Oklahoma are subject to change and can depend on various factors including legislative changes or agency policies. Typically, states might not charge a fee for registering for a sales tax permit, but they may require certain documentation and details about your business.

Federal tax ID requirements for registering

In Oklahoma, if you are registering for sales tax, you generally need to have an Employer Identification Number (EIN), especially if you are operating as a business entity like a corporation, partnership, or have employees. An EIN is necessary for various federal and state tax purposes.

In order to register for an EIN, you can do so through the Internal Revenue Service (IRS) website. The online application is the fastest way to get your EIN, and it is free.

Here is the link to apply for an EIN through the IRS: Apply for an EIN online

Once you have your EIN, you can register for an Oklahoma sales tax permit through the Oklahoma Tax Commission. The online registration is available on their website.

Here is the link to the Oklahoma Tax Commission Online Business Registration System: Oklahoma Tax Commission Online Business Registration System

Make sure to have your EIN ready when you start the registration process for the sales tax permit in Oklahoma.

Streamlined sales tax program and Oklahoma

Yes, Oklahoma is a member of the Streamlined Sales Tax (SST) program.

The Streamlined Sales Tax Governing Board, which oversees the program, includes Oklahoma among its member states. This program aims to simplify and modernize sales and use tax collection and administration for retailers and states.

Acquiring a business and registering for sales tax in Oklahoma

If you are taking over or starting a business in Oklahoma and need to register for sales tax, you generally need to follow these steps:

Determine Your Need to Register: If you will be selling tangible personal property or certain services that are taxable in Oklahoma, you must register for sales tax.

Obtain an EIN: Ensure you have an Employer Identification Number (EIN) from the IRS. This is often necessary for business tax registration and banking purposes.

Complete the Business Registration Application: You will need to fill out the “Oklahoma Business Registration” form, Form BT-190. This form can be completed online through the Oklahoma Tax Commission (OTC) website or through mailed paper forms. Information you'll need includes:

  • Business name and physical address
  • Contact information
  • Details about the business type and structure (e.g., LLC, corporation)
  • The expected start date of business operations
  • EIN and potentially your Social Security Number (SSN) if you're a sole proprietor

Provide Acquisition Details: If you're acquiring an existing business, you may need to provide additional details about the acquisition, such as:

  • The previous owner's details
  • The date of acquisition
  • Any existing permits or licenses the business holds

Submit the Registration Fee: Depending on the specifics of your business, there may be a fee associated with the registration. Check the latest fee schedule from the OTC.

Await Confirmation and Sales Tax Permit: After processing your application, the Oklahoma Tax Commission will issue a sales tax permit. This permit must be displayed at your place of business.

File and Remit Sales Taxes: Once registered, you'll also need to comply with ongoing requirements such as collecting sales tax from customers, filing periodic sales tax returns, and remitting the collected taxes to the state on time. Ensure you keep all related documentation and stay updated with any changes in tax laws or requirements.

Other Oklahoma registrations to consider

In Oklahoma, aside from sales tax registration, businesses may need to consider several other registrations and permits, depending on the nature and activities of the business. Here are some key registrations and permits you might need to consider:

Employer Identification Number (EIN): If you have employees, you need to obtain an EIN from the IRS for federal tax purposes. Even if you don't have employees, obtaining an EIN can be useful for establishing business credit or opening a business bank account.

Oklahoma Business Licenses and Permits: Depending on your business type and location, you may need various state and local licenses and permits. This can include professional licenses, health permits, and zoning permits.

Withholding Tax Registration: If you have employees, you will need to register for withholding tax with the Oklahoma Tax Commission to handle state income tax withholding.

Unemployment Insurance Tax: Employers in Oklahoma are required to register for state unemployment insurance tax with the Oklahoma Employment Security Commission.

Workers' Compensation Insurance: Oklahoma requires most employers to carry workers' compensation insurance. This registration is usually done when setting up the business but must be maintained and reported annually.

Franchise Tax: Some businesses, particularly corporations, are required to pay franchise tax in Oklahoma. Ensure you’re registered for this if it applies to your business structure.

Requirements for online sellers in Oklahoma

Yes, online sellers in Oklahoma must adhere to specific sales tax collection requirements. Here are the key points:

Economic Nexus Threshold: If an online seller, regardless of having a physical presence in Oklahoma, has sales that exceed $100,000 in the state in the current or previous calendar year, they must collect and remit Oklahoma sales tax.

Marketplace Facilitators: Online marketplace facilitators that facilitate sales for third parties and exceed the economic nexus threshold are required to collect and remit sales tax on behalf of their sellers.

Sales Tax Permit: Online sellers meeting the economic nexus or physical presence requirements must obtain an Oklahoma sales tax permit.

Filing and Remittance: Once registered, sellers must file sales tax returns and remit collected taxes to the Oklahoma Tax Commission at specified intervals (monthly, quarterly, or annually), depending on the volume of sales.

Reporting and Compliance: Online sellers must maintain accurate records of all sales transactions and ensure compliance with state tax laws, including keeping up with any changes in tax rates or regulatory requirements.

Collecting sales tax in Oklahoma

Understanding origin vs. destination sales tax collection

Oklahoma employs a modified origin-based sales tax collection system.

In this system, the sales tax rate applied to a transaction is determined by the location of the seller, but the local sales tax revenue is distributed based on the location of the purchaser. This means that while the base state sales tax rate is consistent across Oklahoma, additional local sales taxes reflect the purchaser's location.

For more detailed information, you can refer to the Oklahoma Tax Commission: https://oklahoma.gov/tax.html

Taxable products in Oklahoma

In the state of Oklahoma, various product categories are subject to sales tax. Here's an overview of the types of products that typically incur sales tax:

Tangible Personal Property

Generally, any physical items you can move, touch, or feel are subject to sales tax. This includes:

  • Clothing and footwear
  • Furniture and home goods
  • Electronics (like TVs, computers, and smartphones)
  • Appliances (such as refrigerators, dishwashers, and microwaves)
  • Automobile parts and accessories

Prepared Food and Beverages

Items sold in restaurants, cafes, and other food service establishments are typically taxable. This includes:

  • Meals, snacks, and beverages prepared for immediate consumption
  • Catering services

Certain Services

Some services are also subject to sales tax, including:

  • Admission fees for entertainment events (e.g., movies, concerts, sporting events)
  • Amusement park and recreational facility admissions
  • Personal care services (such as haircuts and tanning)
  • Repairs and maintenance services for tangible personal property

Utilities

In many cases, residential and commercial utilities may also be subject to sales tax. This includes:

  • Electricity
  • Natural Gas
  • Water
  • Telecommunication services

Digital Goods

Sales tax may apply to digital goods and services in Oklahoma, including:

  • E-books
  • Digital music
  • Streaming services
  • Downloaded software and apps

Non-taxable products in Oklahoma

In Oklahoma, certain products are exempt from sales tax based on specific categories defined by the state. While the list below provides an overview, it's important to note that the tax laws and exemptions can change, so always refer to the Oklahoma Tax Commission for the most current information.

Overview of Sales Tax-Exempt Product Genres in Oklahoma

Groceries: Most food items bought for home consumption are typically exempt from sales tax in Oklahoma. This generally includes staple foods such as fruits, vegetables, bread, and meat. However, prepared foods and hot meals usually are not exempt.

Prescription Medications: All sales of prescription drugs are generally exempt. This includes medications prescribed by a licensed practitioner and filled by a pharmacy.

Medical Devices: Certain medical devices are also exempt from sales tax. This category includes items like prosthetics, hearing aids, and insulin syringes.

Clothing and Footwear: During specific sales tax holiday periods, clothing and footwear under a certain price threshold may be exempt from sales tax. Check the Oklahoma Tax Commission for dates and specifics.

Non-Profit / Charitable Purchases: Sales to certain non-profit organizations, including schools and religious organizations, may be exempt from sales tax if the item purchased is used in a way that fulfills their exempt purpose.

Agricultural Products: Items used directly in farming (e.g., seeds, fertilizer, farm machinery) are often exempt when purchased by a qualifying farmer or rancher.

Utilities: Basic utilities like residential electricity, heating, and water services are generally exempt from sales tax.

Is SaaS taxable in Oklahoma?

In Oklahoma, SaaS (Software as a Service) is generally considered taxable as it falls under the category of prewritten software, which is subject to sales tax. The state's tax regulations treat the access and use of software on a subscription basis as a taxable service despite it being delivered electronically.

Are digital products taxable in Oklahoma?

In Oklahoma, as of 2024, digital products are generally taxable.

This includes digital goods like software, e-books, and downloadable music or videos. Consumers purchasing these items need to pay state sales tax, which applies to both physical and digital products to ensure consistent revenue from sales transactions.

Are services taxable in Oklahoma?

In Oklahoma, most services are generally not subject to sales tax.

However, certain services, such as those related to tangible personal property, utilities, and specific professional services, may be taxable.

Sales tax exemption certificates

In Oklahoma, sales tax exemption certificates allow eligible businesses and entities to make purchases without paying state sales tax. Qualified parties, like nonprofit organizations, government entities, and manufacturers, can apply for these certificates.

The application process typically involves providing documentation that proves eligibility, such as tax identification numbers or evidence of nonprofit status. Once approved, the exempt entity presents the certificate to vendors at the time of purchase. Vendors must retain these certificates to validate non-collection of sales tax in case of an audit.

Misuse or fraudulent use of exemption certificates can result in penalties and tax liability for both the purchaser and the vendor.

State tax holidays in Oklahoma for 2024

Sales tax holidays are designated periods when specific items are exempt from sales tax to encourage consumer spending.

Oklahoma 2024 Sales Tax Holidays: There are no scheduled sales tax holidays in Oklahoma for 2024.

Filing sales tax returns in Oklahoma

Determine Your Filing Frequency: Monthly, Quarterly, or Annually: Filing frequency is based on your average monthly sales tax liability.

Register for an Oklahoma Sales Tax Permit: You must register with the Oklahoma Tax Commission (OTC) to collect sales tax.

Collect Sales Tax from Customers: Charge the correct sales tax based on the location of the sale.

Maintain Accurate Records: Keep detailed records of all sales and collected taxes.

File Sales Tax Returns: Returns are due on the 20th of the month following the period for which you’re filing.

Online Filing: Use the OTC’s online system, OkTAP (Oklahoma Taxpayer Access Point).

Remit the Collected Taxes: Payments can be made electronically via OkTAP.

Address Any Discrepancies and Seek Assistance: Respond promptly to any audit notices or discrepancies.

Sales tax filing frequency

In the state of Oklahoma, businesses are required to file sales tax reports at different frequencies depending on their average monthly tax liability. The state categorizes taxpayers into monthly, quarterly, or annual filing periods based on their sales tax collections.

Regardless of the filing frequency, businesses must collect sales tax at the point of sale and remit the total collected amount to the Oklahoma Tax Commission by the deadlines specified. Failure to file or remit the collected sales tax by the due date can result in penalties and interest charges.

Businesses should assess their sales tax liability periodically to ensure they are filing at the correct frequency, as changes in sales volume can necessitate a shift from one filing frequency to another.

Filing Frequencies

Monthly Filing: Businesses with an average monthly sales tax liability exceeding $500 must file their sales taxes on a monthly basis. These returns are due by the 20th day of the month following the reporting period.

Quarterly Filing: Businesses with an average monthly sales tax liability between $50 and $500 are generally required to file their sales tax returns quarterly. Quarterly returns are due by the 20th day of the month following the end of the quarter. The quarters are divided as follows: January-March, April-June, July-September, and October-December.

Annual Filing: Small businesses with a monthly sales tax liability of less than $50 may be eligible to file their sales tax returns on an annual basis. Annual returns are due by January 20th of the following year.

Filing when no sales tax has been collected

In Oklahoma, if you're registered for sales tax and fail to collect it, you may face several consequences. The state requires you to report and remit the appropriate sales tax on all taxable transactions.

Failure to do so can result in penalties, interest on the unpaid tax, and potential audits. Deliberate evasion might lead to more severe penalties, including fines and potential criminal charges.

Penalties for late filing and non-payment of sales taxes

In Oklahoma, timely sales tax filing is crucial for businesses to comply with state regulations. Late sales tax filing can result in significant penalties. If a business fails to file by the due date, a penalty of 10% of the tax due may be imposed, alongside accruing interest. For those who miss the deadline, it’s important to file as soon as possible to mitigate additional penalties.

Non-payment of sales taxes is a severe issue in Oklahoma. If a business collects sales tax from customers but fails to remit it to the state, the consequences can be severe. This can include penalties, interest, and potential legal action.

Penalties for non-payment include a fine equivalent to the unpaid tax amount, potentially doubling the financial burden. Moreover, interest accumulates on the unpaid balance, increasing the overall amount owed. Persistent non-compliance or fraudulent behavior can lead to criminal charges, substantial fines, and even imprisonment.

Sales tax discounts and incentives

In 2024, Oklahoma offers several sales tax incentives and discounts designed to support businesses. Key incentives include:

Manufacturing Exemptions: Businesses involved in manufacturing may qualify for exemptions on sales tax for machinery, equipment, and items used in the production process.

Enterprise Zone Incentives: Companies operating in designated enterprise zones may receive sales tax rebates or reductions, particularly if they meet job creation or capital investment criteria.

Agricultural Exemptions: Agricultural businesses can benefit from exemptions on sales tax for items such as machinery and feed, fostering growth in the agricultural sector.

Pollution Control Equipment: Businesses installing pollution control equipment to meet environmental standards can qualify for sales tax exemptions on such equipment.

Data Centers: Oklahoma offers sales tax incentives for businesses that establish or expand data centers, reducing the tax burden on infrastructure and equipment investments.

2024 sales tax filing due dates for Oklahoma

Coming soon.

Shipping and sales tax in Oklahoma

When to pay tax on shipping in Oklahoma

In Oklahoma, the rules for taxing shipping and handling charges can depend on the nature of the sale and the specific circumstances surrounding the transaction. Here are some general guidelines based on typical Oklahoma sales tax laws:

Taxable Item Sold

If the items being shipped are taxable, then the shipping and handling charges are also subject to sales tax. Essentially, the shipping charge follows the taxability of the item sold.

Non-Taxable Item Sold

If the items being shipped are non-taxable, then the shipping and handling charges are also not subject to sales tax.

Combined Taxable and Non-Taxable Items

If an order includes both taxable and non-taxable items, shipping charges should be allocated proportionally between taxable and non-taxable items. The portion of the shipping charge attributable to the taxable items is subject to sales tax.

Separate Charges

If shipping and handling charges are separately stated on the invoice, they are still generally taxable if the items being shipped are taxable. Separately stating the charges doesn't exempt them from tax.

Designation as Common Carrier

If the delivery is made via common carrier, and the delivery charge is separately stated, it may be subject to sales tax depending on the circumstances and exact wording of state regulations.

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