Hot Seat: Oklahoma’s tax reform efforts aim to boost competitiveness

As Oklahoma legislators weigh tax reform proposals, the state’s top business voice says recent efforts have already improved the state’s economic competitiveness, but more work remains.

Recent Progress on Tax Competitiveness

According to Chad Warmington, president and CEO of the Oklahoma State Chamber of Commerce, a study conducted in partnership with the Tax Foundation helped identify areas where Oklahoma could improve its tax structure. At the time, Oklahoma ranked 30th nationally in overall tax competitiveness.

“We went from 30th to 19th in 2024,” Warmington said. “That was because we did full expensing of capital equipment. We repealed the franchise tax. We eliminated the marriage penalty.”

He said those changes made the state more attractive for business investment, though Oklahoma has since slipped slightly in the rankings. Still, he credited lawmakers for taking the issue seriously and said upcoming legislation could push the state closer to the top 10.

Concerns About Future Revenue Stability

Warmington acknowledged concerns about enacting tax cuts amid economic uncertainty, especially as federal COVID-19 relief funds expire and oil prices remain volatile.

“We are concerned,” he said. “We’ve been through those ... valleys where we’ve had significant revenue shortfalls, and the pressure then always becomes on business, oil and gas, everybody else.”

Warmington said lawmakers are being cautious and highlighted a proposal to collapse the current six income tax brackets into one flat rate, while also increasing the standard deduction.

A Path Forward: Reform with Guardrails

The State Chamber supports a measured approach to tax reform using growth triggers, mechanisms that tie tax cuts to increases in state revenue. Warmington said this strategy allows Oklahoma to remain fiscally responsible while improving its tax structure.

"We're not advocating necessarily that they do that this year, but get themselves on a path that if they are going to do tax reform, do it smart, make it, make it flat, raise the standard deduction, and everybody wins,” he said.

He also emphasized that any future reductions must be balanced with adequate investment in essential services like infrastructure, education and mental health.

Confidence in Leadership, Support for Workforce Investment

Warmington expressed confidence in current legislative leaders, citing their experience navigating past revenue downturns. He also pointed to ongoing efforts to invest in child care and workforce development as critical to Oklahoma’s long-term economic health.

"We have significant loss of daycares in Oklahoma, a thousand over the last ten years," he said, "So we can have a great tax rate. We can have a good education system, we can have a good training system. But if you don't have a place to take your child during the day when you want to work ... none of those other things matter."

Warmington said recent legislation funding the Workforce Commission and strengthening career pathways is encouraging. He also called for more attention to health care outcomes, noting that poor public health rankings are holding the state back.

“You can’t be a state that competes if you’re 48th in fourth-grade reading and 48th in health care outcomes,” he said.

Competing Regionally

Warmington noted other states are making similar reforms, which means Oklahoma can’t afford to fall behind.”

With $5 billion now in Oklahoma’s rainy day fund, he said the state has some flexibility and an opportunity to lead.

"I think we can find ourselves where the Tax Foundation will say we have one of the most competitive overall tax codes in the country. And that's what we're shooting for," he said.