Oklahoma Small Business Taxes: The Employer’s Complete 2023 Guide

Feli Oliveros

If you’re serious about starting a small business in Oklahoma (or if you have one already), chances are you already know that the first few years are the hardest. With so many startups closing up shop because of cash flow issues, it’s important to understand your business finances and tax obligations so you can better plan for the future. 

And that’s where this tax guide comes in. We’ll cover everything you need to know about filing and paying business taxes in the Sooner State—from tax rates and due dates to filing guidelines and helpful resources—so you can make better decisions for your new business. Here, you’ll read about:

What business taxes do you pay in Oklahoma?

Because most people already pay income taxes, many aspiring entrepreneurs also expect to pay them when they start a business. But there are many other taxes you’ll have to take into account, depending on factors like your business structure, employer status, and industry. 

In Oklahoma, companies typically pay income tax, franchise tax, sales tax, employer taxes, plus any industry-specific or local taxes that apply. Let’s look at each of these taxes in detail. 

Oklahoma personal income tax

Pass-through entities—which include sole proprietorships, partnerships, and limited liability companies (LLCs)—typically don’t pay state income taxes themselves. Instead, their income tax obligations are passed down to their owners, who pay taxes on their share of the business income at the state’s individual tax rates.

In 2023, the Oklahoma income tax rate ranges from 0.25% to 4.75%. 

How to file and pay

Oklahoma individual tax returns (Form 511 for residents and Form 511-NR for part-year residents and non-residents) are due the same day as your federal return. So for most taxpayers, the tax filing deadline is April 15. 

Taxpayers file their returns through the Oklahoma Taxpayer Access Point (OK TAP) online tax system. But if you want to file a paper return instead, mail your completed tax form and payment to the address below:

Oklahoma Tax Commission
PO Box 26800
Oklahoma City, OK 73126-0800

If your expected income tax liability is greater than $500, you may need to make quarterly estimated tax payments by April 15, June 15, September 15, and January 15. These payments can be made online through OK TAP or by mail. If you pay by mail, include Form OW-8-ES with your check and send both to this address:

Oklahoma Tax Commission
PO Box 269027
Oklahoma City, OK 73126-9027

Visit the Oklahoma Tax Commission (OTC) website for more information on the individual income tax.

Oklahoma partnership income tax return

Partnerships and LLCs taxed as partnerships with Oklahoma income sources file a separate tax return in addition to the ones their business owners file.

Because they’re considered pass-through entities, these businesses don’t pay income taxes. However, they are responsible for withholding 4.75% of any Oklahoma taxable income distributed to their non-resident partners or members. 

How to file and pay

Partnership tax returns (Form 514) are due 30 days after the federal partnership return is due. Since the federal tax return is due on the 15th day of the third month after the end of the company’s fiscal year, the due date for the state return is typically the 15th day of the fourth month following the end of the fiscal year. 

Additionally, all partnership returns must be filed electronically using an authorized e-filing method

Some partnerships may need to pay estimated taxes on behalf of any non-resident partners if they expect to owe $500 or more in income taxes. The deadlines for these payments are the 15th day of the fourth, sixth, and ninth months of the fiscal year, as well as the 15th day of the month following the end of the fiscal year. Estimated tax payments can be made via OK TAP or sent by mail (along with payment voucher Form OW-8-ESC) to this address:

Oklahoma Tax Commission
PO Box 269027
Oklahoma City, OK 73126-9027

You can find more information on filing the Oklahoma partnership tax return by reading the partnership tax return form and instructions guide. 

Oklahoma pass-through entity election

Partnerships, S corporations, and LLCs taxed as a partnership or S corp can pay taxes on the entity level if their partners, owners, or members elect to do so. Companies that make this election are known as electing pass-through entities (PTEs).

The tax rate for electing PTEs ranges from 4% to 4.75%.

How to file and pay

Qualifying companies that want to make the PTE election must file Form 586 with the OTC. Send the tax form to the address below:

Oklahoma Tax Commission
Oklahoma City, OK 73194

Once the election is made, the state of Oklahoma considers it binding until the PTE revokes the election by filing Form 586 once again.

Companies that make the PTE election use the partnership tax return (Form 514) to file their taxes with the Oklahoma Tax Commission. As a result, the tax filing guidelines and deadlines are the same as the partnership return—with one slight change. All PTE tax payments should be sent via OK TAP or mailed along with Form OW-8-ESC to a different address: 

Oklahoma Tax Commission
PO Box 26890
Oklahoma City, OK 73126-0890

More information on the pass-through entity election can be found in the partnership tax return and filing instructions provided by the OTC.

Oklahoma corporate income tax

All corporations (and LLCs taxed as such) that do business in Oklahoma or receive income from sources in the state must file an Oklahoma corporate tax return, even if no tax is due. 

The state’s corporate income tax rate is 4% in 2023. Keep in mind that, as pass-through entities, S corporations themselves don’t pay income tax. 

How to file and pay

Oklahoma corporate income tax returns (Form 512 for C corporations and Form 512-S for S corporations) are due 30 days after the deadline for their respective IRS tax returns. 

All corporate tax returns must be filed electronically using an OTC-approved e-filing method. Any accompanying tax payments can be made through the OK TAP portal. 

If your company expects its income tax liability to exceed $500, you must make estimated tax payments quarterly. These payments must be submitted by the 15th day of the fourth, sixth, and ninth months of the fiscal year, as well as the 15th day of the month following the end of the fiscal year. Make payments online via OK TAP or send them by mail (with Form OW-8-ESC) to the following address:

Oklahoma Tax Commission
PO Box 269027
Oklahoma City, OK 73126-9027

More details on filing C corporation and S corporation tax returns can be found in their respective tax form and instruction guides. 

Franchise tax

Some states impose a franchise tax on companies for the privilege of doing business in the state. Oklahoma’s franchise tax only applies to C corporations, S corporations, and LLCs that are taxed as either type of corporation. 

Companies that pay the Oklahoma franchise tax are charged $1.25 for each $1,000 of capital the business invests or uses in the state, with a maximum tax liability of $20,000. Foreign corporations pay an additional $100 fee each year. 

How to file and pay

Corporations that pay the $20,000 maximum franchise tax must submit an annual franchise tax return (Form FRX-200) and any payment by May 1, while all other corporations have until July 1 to file and pay the franchise tax.

You can also elect to file your franchise tax return using the same tax form as your corporate return by filing Form 200-F. This allows you to file according to the corporate tax return schedule rather than following the deadlines above. However, note that corporations that paid the maximum franchise tax in the previous tax year are restricted from filing a combined corporate and franchise tax return. 

Oklahoma corporations with a franchise tax liability of $250 or less are tax-exempt and should file a “no tax due” return instead. Foreign corporations that don’t meet the $250 tax threshold are still responsible for paying the $100 annual fee, though. 

No matter which filing method you use, use the OK TAP online portal to file and pay your franchise taxes. 

Visit the OTC business taxes webpage to learn more about the Oklahoma corporate and franchise taxes. 

Sales and use tax

Businesses that sell at least $100,000 worth of physical products or certain taxable services in Oklahoma are required to collect sales tax at the point of purchase. Physical products purchased outside of Oklahoma for use within the state may be subject to a use tax as well. 

If you’re unsure whether you need to pay any of these taxes, the OTC provides a short sales and use tax infographic to help you learn more. 

The state sales tax rate is 4.5% in 2023.

How to file and pay

To collect Oklahoma sales tax, first you need to register for a sales tax permit through OK TAP. You’ll also be assigned a monthly or semi-annual tax filing frequency after you complete the registration process. 

No matter your filing frequency, sales tax returns (Form STS-20002-A) and payments are due on the 20th day of the month after the end of the reporting period. File and pay your taxes via OK TAP, or submit paper returns and any payment to the address below:

Oklahoma Tax Commission
PO Box 26850
Oklahoma City, OK 73126-0850

Note that all registered businesses must file returns even if they have no sales or use tax to report for the period. 

Go to the Oklahoma Tax Commission’s sales and use tax webpage to get more information on the tax. 

Withholding tax

Businesses in Oklahoma that hire workers must withhold a percentage of each employee’s income and send it to the Oklahoma Tax Commission. These taxes are known as withholding taxes or employer taxes. 

Withholding rates often differ between employees because the withholding tax rate depends on factors like the employee’s withholding allowances and wages. However, Oklahoma’s withholding tax ranges from 0.25% to 4.75%. You can look over the OTC’s income tax withholding tables to help you calculate how much to withhold from each employee’s paycheck.

How to file and pay

Employers must register their business through the OK TAP system in order to pay Oklahoma withholding taxes. You’ll use this portal to file and pay withholding taxes as well. 

Once your business is registered, you’ll be assigned a monthly, quarterly, or twice-a-week payment frequency based on your withholding tax liability. However, most small businesses pay withholding taxes monthly or quarterly. 

Because of the multiple payment frequencies, withholding tax returns (Form WTH-10001) are sometimes submitted separately from an employer’s withholding payments. Tax returns are due by the 20th day of the month after each calendar quarter ends. 

Additionally, all employers are required to file employee information returns via OK TAP by January 31. 

Learn more about the Oklahoma withholding tax by visiting the OTC website

Unemployment insurance tax

Employers who meet one of the following conditions must pay state unemployment insurance taxes to the Oklahoma Employment Security Commission (OESC):

  • Employs at least one worker during any 20 weeks in a calendar year
  • Pays $1,500 or more in wages in a calendar quarter 
  • Acquires a business that pays unemployment taxes

These taxes pay for the unemployment benefits of eligible workers who leave the company through no fault of their own. 

New employers pay a 1.5% tax rate on the first $25,700 of each employee’s wages. After one year of contributing to the state unemployment fund, businesses may be assigned a new UI tax rate by the OESC. 

Established employers then receive a notice every September with an updated contribution rate for the upcoming year. In 2023, unemployment tax rates for established employers range from 0.3% to 9.2%. 

How to file and pay

Before you can file and pay unemployment taxes, you must register your business with the OESC through the EZ Tax Express Portal. You’ll use this system to file and pay unemployment taxes as well. 

Employer contribution reports and tax payments are due by the last day of the month after the calendar quarter ends. 

You can get more information about the Oklahoma unemployment tax on the OESC employer webpage.  

Other industry-related and local taxes

In addition to the taxes covered above, you may be responsible for other business taxes based on your company’s industry, products or services sold, and business activities. These taxes include: 

  • Alcohol and Tobacco Permit
  • Motor Fuel Tax
  • Motor vehicle excise tax
  • Agriculture Permit

Many municipalities in Oklahoma levy local taxes on businesses that operate in their jurisdiction as well. For instance, some cities and counties impose local sales taxes or tangible personal property taxes. Rates vary between municipalities, so you’ll need to check with your local tax authorities for further details. 

Because the taxes discussed in this section depend on your location and business activities, you’ll want to talk with your tax advisor or accountant to learn which taxes (if any) apply to your business. 

Oklahoma business tax breakdown by business type

To help you keep track of your state tax obligations, the chart below breaks down the taxes that different business entity types typically pay in Oklahoma. Keep in mind that pass-through entities don’t pay federal income taxes themselves—their business owners pay the income taxes on their personal returns instead. 

Business typePersonal income taxPartnership income tax returnPass-through entity electionCorporate income taxFranchise taxSales and use taxWithholding taxUnemployment taxFederal income taxes
C corporationNo No No YesYes Yes, if applicableYes, if you hire employeesYes, if you hire employeesYes
S corporationYes (pass-through), if not making the PTE electionNo Yes, if it makes the PTE-E electionYes Yes Yes, if applicableYes, if you hire employeesYes, if you hire employeesYes (pass-through)
LLCDepends on how it’s structuredDepends on how it’s structuredYes, if it makes the PTE-E electionDepends on how it’s structuredDepends on how it’s structuredYes, if applicableYes, if you hire employeesYes, if you hire employeesYes (pass-through)
Partnership Yes (pass-through), if not making the PTE electionYes Yes, if it makes the PTE-E electionNoNoYes, if applicableYes, if you hire employeesYes, if you hire employeesYes (pass-through)
Sole proprietorshipYes (pass-through)No No NoNoYes, if applicableYes, if you hire employeesYes, if you hire employeesYes, by way of individual income tax

File your Oklahoma small business taxes with Gusto

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Feli Oliveros Feli Oliveros is a freelance finance and business writer with experience covering personal and small business finance. In 2015 she graduated from UCLA, where she earned her bachelor’s degree in English and minored in Anthropology.
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