No more state grocery tax

Feb. 28—An official inking of the first bipartisan tax cut bill to make it to the governor's desk in years will bring a 4.5% reduction to most Oklahomans' grocery bills — very soon.

Republican Senate Pro Tem Greg Treat and House Speaker Charles McCall, along with Democrat leaders Rep. Cyndi Munson and Sen. Kay Floyd, joined Gov. Kevin Stitt for the signing of the bill.

Only one Republican and one Democrat voted against the measure.

Both Republicans and Democrats are hailing this tax cut as a win.

"This is going to help all citizens in Oklahoma, regardless of political party," McCall said.

Democrats say lowering taxes on groceries is something they've been proposing for a long time.

"It is good to see a bipartisan effort," Floyd said.

The tax cut on grocery items, excluding "prepared foods," is estimated to save each Oklahoman an average of $104.25 per year. It will reduce state revenue by $418 million per year.

Rogers County Sen. Julie Daniels said it was important to make this decision now, so legislators can move ahead with "crafting the state budget" by the end of May.

Opponents and even some supporters of the tax cut point out that elimination of the grocery tax will not affect all food items.

Still taxable will be prepared foods, meals sold with eating utensils, and hot and cold drinks sold with meals. Sales tax will also continue to be collected on alcoholic beverages, dietary supplements, and tobacco and marijuana products.

"Eliminating the state sales tax on groceries will bring much-needed tax relief to Oklahomans reeling from inflated prices, due to bad policies in Washington, D.C.," Daniels said. "They will start to benefit this year and every time they purchase groceries."

Stitt signed the bill Tuesday. The Senate voted on the measure Thursday, last week. The bill originated in the House.

Taxpayers will note this does not eliminate local and county sales taxes on groceries. These local taxes will still be collected at the grocery check-out stand. However, any municipality seeking to propose a new sales tax increase to local voters will have to wait until after July 2025 to do so.

"I am committed to continuing to work to implement tax reform, which I believe is critically important to the long-term prosperity of Oklahomans and our ability to attract new business to our state," Daniels said in her prepared statement.

Daniels served on the Senate tax reform task force created in 2021.

Oklahoma House Democratic Leader Cyndi Munson, D-Oklahoma City, said the passage of House Bill 1955 accomplished a goal House Democrats had been working on and supported for many years.

"For the past several legislative sessions, including special sessions, the House Democratic Caucus has filed legislation to eliminate the state sales tax on groceries to provide immediate tax relief for working Oklahomans each time they go to the grocery store," Munson said. "It has always been our priority — and will remain a priority — for us to protect our revenue base while also advocating for policies that will lower costs for Oklahoma families who need it the most. I am pleased the Oklahoma State Senate has finally taken action on what we already know will help so many Oklahoma families."

Rep. Mark Lepak, R-Claremore, has offered a bill to reduce the state income tax. His House Bill 3674 is one of several such bills filed this year calling for up to a .25% cut to the state income tax.

A flat rate income tax system with a rate of 4.4% made it out of the House Committee last week. That bill is proposed by Speaker McCall, R-Atoka. However, Oklahoma Center of Public Affairs reports some Senate Republicans are now balking at cutting the income tax, saying state government cannot afford to do both.

Daniels has announced her intentions to run for a third term this year. She represents Washington and Nowata counties, as well as the northern half of Rogers County including many Claremore residents.