Senate Approves Sales Tax Holiday

A measure creating a back-to-school sales tax holiday passed off the Senate floor Tuesday and is headed for the Oklahoma House of Representatives.

Senate Bill 1665 by Senate Finance Committee Chairman Jay Paul Gumm was approved by a 42-5 vote. The measure is part of the Senate Democrats “Agenda to Empower the Middle Class” and is supported by Governor Brad Henry.

“A ‘Back-to-School’ sales tax holiday puts real money back into the pockets of middle class families who already contribute so much to Oklahoma’s growing economy,” Gumm said. “It is also critical to put Oklahoma’s retailers – many of them small businesses – on equal footing with retailers across the borders in Texas and Missouri.”

Both those states have sales tax holidays for back-to-school shopping. During the three-day holiday – the first weekend in August – Texas and Missouri drain thousands of shoppers and millions of dollars from the Oklahoma economy.

Gumm, a Democrat from Durant, said the Oklahoma version would be for the same days and the same items as the Texas holiday.

“Oklahomans would be able to stay home to avoid the sales tax on critical back-to-school items,” he said. “That will strengthen Oklahoma’s retail economy – especially small businesses on Main Streets in just about every community.”

Senators also gave approval Tuesday to legislation that offer tax incentives to encourage Oklahomans to further their college education and a measure that increases the amount of retirement income that is exempt from state income tax.

Senate Bill 1312 creates an income tax credit of up to $500 for amounts paid for an individual’s higher education expenses.

“This bill rewards working Oklahomans who take on the responsibility of furthering their education to better equip themselves to be competitive in a global marketplace,” Gumm said.

Senate Bill 2016 increases the existing tax exemption for retirement benefits from the current limit of $10,000 to an amount dependent upon a taxpayer’s filing status and the source of their retirement income. For retirees whose filing status is single or married filing separately, the amount is increased to $25,000. For retirees whose filing status is married filing jointly, as head of household or qualifying widow, the exemption is increased to $50,000. The measure would first apply in the 2007 tax year.

“This tax cut will keep members of Oklahoma’s greatest generation in our state and will attract retirees from other states when they are looking for a place to live out their golden years,” Gumm said.