Oklahoma Gov. Stitt, Legislature Reach $12.6B Budget, Income Tax Cut Agreement

Oklahoma Governor Kevin Stitt and legislative leaders have reached a $12.59 billion budget agreement for fiscal year 2026 that includes a quarter-point cut to the state's top income tax rate, reducing it from 4.75% to 4.5%, and eliminating three tax brackets for low-income individuals. This plan sets a path for gradually reducing the income tax until it is completely repealed, aiming to enhance Oklahoma's competitiveness with neighboring states such as Texas, which has no income tax. The budget also allocates significant investments in infrastructure, including funds for a new veterinary hospital at Oklahoma State University, a pediatric heart hospital at the University of Oklahoma, and the purchase of a prison facility. Stitt emphasized that previous tax cuts have spurred economic growth and that this budget reflects fiscally responsible, conservative governance focused on business-friendly policies and critical public needs. While Republican leaders praised the comprehensive approach, some Senate Democrats expressed concerns that the budget prioritizes businesses over working families, education, and healthcare access. The agreement further includes tort reforms and the creation of specialized business courts to improve the state's legal environment for businesses.