Oklahoma § 68-2357.105 - Credit for qualified economic development

§ 68-2357.105. Credit for qualified economic development

expenditures.

A. As used in this section:

1. “Eligible entity” means an entity incorporated and located

in the state with a qualifying project in a qualifying project

location;

2. “Qualifying project” means the new construction or expansion

of an eligible entity or the development of qualified initial

infrastructure to serve an eligible entity in a qualifying project

location;

3. “Qualifying project location” means a project located in an

industrial park, economic development zone, or port located within a

county in this state with a population of less than one hundred

thousand (100,000) persons (“Qualified Area”), or a project located

adjacent to a terminal, switching, or Class II or III railroad as

defined by the federal Surface Transportation Board;

4. “Project sponsor” means a local economic development

organization or authority, port authority, qualified industrial

park, or a terminal, switching, or Class II or III railroad;

5. “Project application” means an application submitted by a

project sponsor on behalf of a qualifying project for an allocation

of qualifying strategic industrial development enhancement (SIDE)

tax credits. Project applications must include a description of the

qualifying project, project location, detailed project costs, and a

summary of expected economic benefits and job creation;

6. “Qualified economic development expenditures” means

expenditures for land improvements, building construction, building

improvements and expansion, port terminal improvements, and the

purchase of certain machinery and equipment;

7. “Qualified initial infrastructure expenditures” means

expenditures for new rail infrastructure and improvements, which

includes the acquisition of right-of-way, engineering,

rehabilitation of existing inactive track to reinstate operation,

construction of new track such as industrial leads, switches, spurs,

and sidings, loading dock improvements, and transloading structures

involved with providing rail service to a qualifying project; and

Oklahoma Statutes - Title 68. Revenue and Taxation

8. “Project tax credit amount” means the amount of tax credits

allocated by Oklahoma Department of Commerce to a qualifying project

for qualified economic development and initial infrastructure

expenditures.

B. For tax years beginning after December 31, 2022, and ending

not later than December 31, 2027, there shall be allowed a credit

against the tax imposed pursuant to Section 2355 of this title in an

amount not to exceed ten percent (10%) of an eligible entity’s

qualified economic development expenditures, subject to limitations,

determination, and allocation by the Oklahoma Department of

Commerce.

C. The total project tax credit amount may not exceed ten

percent (10%) of the qualified economic development expenditures,

except for qualified initial infrastructure expenditures the project

tax credit amount is earned at the rate of fifty percent (50%) of

qualified initial infrastructure expenditures.

D. 1. The project tax credit amount for qualified economic

development expenditures may not exceed Six Million Dollars

($6,000,000.00) per qualifying project.

2. The project tax credit amount for qualified initial

infrastructure expenditures may not exceed Three Million Dollars

($3,000,000.00) per qualifying project.

Projects are eligible to combine qualified economic development

and qualified initial infrastructure expenditures, but the total

project tax credit amount may not exceed Six Million Dollars

($6,000,000.00) per qualifying project in aggregate.

E. The issuance of the project tax credit amount shall be

subject to review of eligible expenditures and qualifying project

status by the Oklahoma Department of Commerce.

F. The credits authorized pursuant to this section may not be

used to reduce the tax liability of the taxpayer to less than zero

(0).

G. The credits allowed pursuant to this section that are not

used may be assigned to a qualifying project affiliate by written

agreement at any time during the tax year in which the credit is

earned or the five (5) years following the tax year the qualified

expenditures are incurred. For purposes of this subsection, a

“qualifying project affiliate” shall include a customer, vendor,

project investor, or strategic finance partner of the eligible

entity subject to the Oklahoma corporate or individual income tax.

The eligible taxpayer and the qualifying project affiliate must

jointly file a copy of the written assignment agreement with the

Oklahoma Tax Commission within thirty (30) days of the assignment.

The written agreement must contain the name, address, and taxpayer

identification number of the parties to the assignment, the tax year

the eligible taxpayer incurred the qualified expenditures, the

Oklahoma Statutes - Title 68. Revenue and Taxation

amount of credit being assigned, and the tax year or years for which

the credit may be claimed.

H. To the extent not used, the tax credit authorized by this

section may be carried over, in order, to each of the five (5)

subsequent taxable years.

I. Credits allocated by the Department shall not exceed Twelve

Million Dollars ($12,000,000.00) in a tax year. Qualifying projects

that have submitted an application and are not allocated all or part

of credit for qualified economic development expenditures or

qualified initial infrastructure expenditures shall be eligible for

credit in subsequent tax years.

J. 1. The Oklahoma Tax Commission may promulgate rules, forms,

and regulations as are necessary to implement and administer the

provisions of this section and certify the tax credit amount

generated by each qualifying project annually.

2. The Oklahoma Department of Commerce shall promulgate rules

to permit verification of the eligibility of a qualifying project

for the purpose of claiming the credit. The rules shall provide for

the approval of qualified economic development expenditures prior to

commencement of a project and provide a certificate of verification

upon completion of a project that uses qualified economic

development expenditures. The certificate of verification shall

satisfy all requirements of the Oklahoma Tax Commission pertaining

to the eligibility of the eligible taxpayer claiming the credit.

Added by Laws 2022, c. 340, § 1, eff. Jan. 1, 2023. Amended by Laws

2024, c. 164, § 1, eff. Jan. 1, 2025.