Understanding the Oklahoma franchise tax

Oklahoma repealed its franchise tax through legislative action in 2023, marking a significant shift in the state's business taxation approach.

By scrapping the franchise tax, the state simplified its tax structure and reduced paperwork for businesses, particularly those operating in multiple states. Oklahoma’s lack of franchise tax contrasts with states like Delaware, Texas, and Illinois, where companies continue to navigate the complexities of the franchise tax model.

Penalties for unpaid franchise tax

Although Oklahoma eliminated its franchise tax in 2023, businesses will have to pay any taxes owed for 2023 or prior. The deadline to align franchise and corporate income tax filing periods has passed, so you’ll need to contact the Secretary of State if you think you still owe. 

Oklahoma typically charges interest and percentage-based penalties on late or missed tax payments. The state can suspend corporations for unpaid franchise tax until the debt is settled. If your business was suspended before 2024 for franchise tax non-payment, you must still fulfill those obligations to restore good standing.

Businesses should maintain franchise tax records from 2023 and prior years for at least three years in case of audit or dispute resolution.

Alternative obligations and adaptations

While there is no longer an Oklahoma franchise tax, some entities must file an annual report (called an Annual Certificate) with the Oklahoma Secretary of State. These filings come with fees that are generally much lower than the former franchise tax. 

Annual Registered Agent Fee

Corporations with an Oklahoma foreign qualification will also pay the annual registered agent fee of $100 via Form 200-R (due July 1). 

Annual Certificate

• For LLCs: The Annual Certificate fee is $25, due on the anniversary of formation.
• For LPs: The fee is $50, due on the anniversary of formation.

Oklahoma taxes

Oklahoma businesses may be responsible for additional taxes. 

• Corporate income tax is assessed at 4% of taxable income. This rate compares favorably to neighbors like Texas, which has no corporate income tax but charges a margin tax on gross receipts.
• Sales and use taxes are assessed at 4.5%, with local taxes potentially bringing the total to 8-10% in some areas. 
• Property taxes also still apply, but are handled at the local level.

Tax incentives

The Quality Jobs Program offers quarterly cash rebates to companies creating new jobs. The state also provides an Investment/New Jobs Tax Credit for businesses that make capital investments or create jobs in manufacturing, processing, or aircraft maintenance.

Discern makes multi-state compliance easy

Oklahoma's corporate income tax and other business taxes require professional tax expertise and are filed through the state's tax system.

While Discern does not file Oklahoma taxes directly, Discern can file your Annual Certificates with the Secretary of State, provide registered agent services, notify you when obligations are due, and help you track compliance across all your entities.

Ready to simplify your multi-state compliance? Book a demo to see how Discern streamlines entity management across all 50 states and DC.