Mark Neumeister - The Journal Record
May 10, 2023
Oklahoma tax credits are only for the largest of Oklahoma’s businesses, right? Not so fast. Oklahoma offers a wide variety of tax credits. Some require substantial investment and lengthy applications.
Oklahoma tax credits are only for the largest of Oklahoma’s businesses, right? Not so fast. Oklahoma offers a wide variety of tax credits. Some require substantial investment and lengthy applications. Here are two credits that are easy to get and are new for 2022.
Credit for Blood Donations.
If you are an employer, consider holding a blood drive for your employees. New for the 2022 tax year, and running through 2027, the tax credit is $20 per employee. The credit is available to employers for each verified blood donation made by an employee as part of a blood drive that is organized by an Oklahoma nonprofit blood donation organization in coordination with an employer or group of employers. The blood drive may not be open to non-employees.
Credit for Contributions to Public School Foundation or Public School District.
Also new for 2022, a credit against personal income tax liability is allowed for a contribution to an eligible school foundation or public school district. The credit amount is equal to 50% of the total amount of contributions made during the taxable year. The maximum amount of credit allowed is $1,000 for single individuals and $2,000 for married individuals filing jointly.
Even better, for a taxpayer who makes an eligible contribution and makes a commitment to contribute the same amount for an additional year, the credit jumps to 75% of the total amount of contributions. What is the math, you ask, to max out the credit amounts? For a one-year contribution, a gift of $2,000 will get you the maximum credit amount of $1,000 ($2,000 X 50% = $1,000). Double that for those married filing jointly. If you commit to the two-year contributions, then a $1,333.33 gift each year will get you the max credit of $1,000 ($1,333.33 X 75% = $1,000). Double that for those married filing jointly.
To get the higher 75% credit rate, a taxpayer must provide evidence of the written commitment to make the two-year donation, to the Oklahoma Tax Commission. Attach that proof to your tax return when claiming the credit.
Check with the public school foundation or public school district before contributing to confirm they are an “eligible” entity. An eligible public school foundation or public school district must submit an application to the Tax Commission (OTC Form 80001) that enables the Tax Commission to confirm that the organization is a nonprofit entity exempt from tax and describes the proposed innovative educational program or programs supported by the organization. The Tax Commission reviews and approves or disapproves the application, in consultation with the State Department of Education.
Oklahoma has placed a cap on the total credits available for education related credits that include the: (1) credit for contributions to scholarship-granting organizations; (2) credit for contributions to educational improvement grant organizations; and (3) credit for contribution to an eligible public school foundation or public school district. Total statewide credits for these three programs are capped at $25 million for 2022. The credit amount will also be limited to $200,000 per public school district annually.
Mark O. Neumeister, CPA, CGMA, is a partner at Arledge, the largest locally owned accounting firm in the Oklahoma City metropolitan area. Arledge is a recognized leader in the accounting industry offering practical solutions in the areas of tax planning, auditing, consulting, accounting advisory services and client accounting.
This article contains general information only and does not constitute tax advice or any other professional services. Before making any decisions or taking any action that might affect your income taxes, you should consult a professional tax advisor. This article is not intended for and cannot be used to avoid future penalties that may be imposed by the Internal Revenue Service.