Overview of Oklahoma Taxes
Like the majority of the nation, Oklahoma has a progressive state income tax system. It has six tax brackets with rates ranging from 0.25% up to 4.75%. The bracket you fall into will depend on your income level and filing status. There are no local income taxes in Oklahoma.
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Oklahoma Paycheck Calculator
Oklahoma Paycheck Quick Facts
- Oklahoma income tax rate: 0.25% - 4.75%
- Median household income: $62,138 (U.S. Census Bureau)
- Number of cities that have local income taxes: 0
How Your Oklahoma Paycheck Works
You don’t receive your full, quoted salary each year because your employer also withholds taxes from your paychecks. Regardless of where you live in the U.S., your employer withholds money to pay FICA and federal income taxes.
Federal income tax is sent to the IRS, where it counts toward your annual income taxes. Instead of paying your taxes in one lump sum during tax season, you pay gradually throughout the year. How much your employer withholds from your paychecks for federal income taxes depends on factors like your salary, marital status and number of dependents. Information about your filing status is on your W-4, and your employer uses it to figure out how much to withhold. This is why you need to fill out a new W-4 whenever you start a new job or experience a big life change, like a marriage. You can also make changes to your W-4 throughout the year if you simply want to adjust the taxes coming out of your paycheck.
The IRS made a few notable changes to the W-4 in recent years. One big change is that the new form doesn't let you claim allowances anymore. Instead, it utilizes a five-step process that allows filers to indicate any additional income or jobs, income tax credits and more.
Besides federal income taxes, you’ll see Social Security and Medicare taxes come out of your paycheck. Together these make up FICA taxes. The government collects 12.4% of your wages for Social Security and 2.9% to fund Medicare. In most cases, you are only be responsible for half of that amount because your employer will pay the other half for you. However, self-employed workers and contractors may have to pay the full FICA taxes. If you find yourself in this position, make sure to see if you’re eligible for any tax deductions come tax time, so that you can recoup what you spent on the “employer” portion of FICA taxes.
Finally, you'll also pay a 0.9% Medicare surtax on a portion of your wages if you earn over a certain amount. If your filing status is single, head of household or qualifying widow(er), you'll pay this tax on wages that exceed $200,000. If you're married and file jointly, this tax applies to any wages above $250,000. Lastly, married couples filing separately pay this tax on wages in excess of $125,000. Your employer does not match this surtax.
Oklahoma has a six-bracket progressive income tax system. The state's top income tax rate of 4.75% is in the bottom half of all states. However, this top tax rate applies to taxable income over just $7,200 for individuals and married couples filing separately. The top tax rate applies to income above $14,400 for heads of household and married couples filing jointly. This relatively low income threshold for the highest bracket means most Okies will pay this 4.75% rate on at least a portion of their income.
There are no added local income taxes anywhere in Oklahoma.
A financial advisor can help you understand how taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
How You Can Affect Your Oklahoma Paycheck
The federal income, FICA and state income taxes withheld from your paycheck are mostly beyond your control, in the sense that you are obligated to pay them. However, you can do certain things to help affect how much you have to pay in taxes per paycheck.
If you choose to pay for health or life insurance through a company-sponsored plan, the money you pay for any premiums will be subtracted from your wages. Similarly, if you decide to save for retirement via an employer-sponsored plan like a 401(k) or 403(b), your contributions will be subtracted from your wages. Putting money into a 401(k) or 403(b) can actually help to lower your taxable income because that money is taken from your paycheck pre-tax (that is, before taxes are applied). In other words, by taking advantage of a 401(k) or 403(b), you are not only saving for your future, you’re saving on taxes in the present, too.
You can also opt to contribute some of your income in a health savings account (HSA) or flexible spending account (FSA). You can use the funds you put in an HSA or FSA to pay for certain medical expenses like copays or prescriptions. Just be cautious about how much money you put in an account like this. FSA funds above $660 won't roll over from 2024 to 2025. You'll lose that money if don’t use it by the end of the year.
With below-average income taxes and low property taxes, you may be considering a move to Oklahoma. Take a look at our Oklahoma mortgage guide to better understand the ins and outs of getting a mortgage in the Sooner State.
