How Oklahoma taxes retirement income
Oklahoma does not tax Social Security benefits. Pensions and 401(k)/IRA withdrawals are partly taxed (there is an exclusion, then the rest is taxed). Social Security benefits are 100% excluded (Schedule 511-A, line 2). Military retirement pay from any branch of the Armed Forces is 100% excluded, and Federal Civil Service Retirement System (CSRS) benefits paid in lieu of Social Security are 100% excluded. Beyond those full exemptions, each individual may exclude up to $10,000 combined (not to exceed the amount included in federal AGI) of (a) Oklahoma government/federal civil-service retirement (OPERS, Teachers' Retirement System, Law Enforcement Retirement System, Firefighters Pension, Police Pension, county/municipal systems, Uniform Retirement System for Justices and Judges, plus any CSRS not already excluded) and (b) other qualifying retirement income (401(k) plans under IRC Sec. 401, 457 deferred comp, IRA/annuity under IRC Sec. 408, 403(a)/(b) annuities, Sec. 402(e) lump-sum distributions). U.S. Railroad Retirement Board benefits are also fully excluded. Any retirement income above the combined $10,000-per-person exclusion (lines A5+A6) is taxed as ordinary income at Oklahoma's graduated rates; each spouse on a joint return can claim their own $10,000 exclusion if each has qualifying retirement income in their own name.
Retirement income tax in Oklahoma, at a glance
| Income type | Taxed by Oklahoma? |
|---|---|
| Social Security | No |
| Pensions | Partially (exclusion applies) |
| 401(k) / IRA withdrawals | Yes |
| Estate / inheritance tax | None |
| Avg. property tax rate | 0.79% of home value |
Does Oklahoma tax Social Security benefits?
No. Oklahoma does not tax Social Security benefits.
Does Oklahoma tax pensions and 401(k) or IRA withdrawals?
Partly. Social Security benefits are 100% excluded (Schedule 511-A, line 2). Military retirement pay from any branch of the Armed Forces is 100% excluded, and Federal Civil Service Retirement System (CSRS) benefits paid in lieu of Social Security are 100% excluded. Beyond those full exemptions, each individual may exclude up to $10,000 combined (not to exceed the amount included in federal AGI) of (a) Oklahoma government/federal civil-service retirement (OPERS, Teachers' Retirement System, Law Enforcement Retirement System, Firefighters Pension, Police Pension, county/municipal systems, Uniform Retirement System for Justices and Judges, plus any CSRS not already excluded) and (b) other qualifying retirement income (401(k) plans under IRC Sec. 401, 457 deferred comp, IRA/annuity under IRC Sec. 408, 403(a)/(b) annuities, Sec. 402(e) lump-sum distributions). U.S. Railroad Retirement Board benefits are also fully excluded. Any retirement income above the combined $10,000-per-person exclusion (lines A5+A6) is taxed as ordinary income at Oklahoma's graduated rates; each spouse on a joint return can claim their own $10,000 exclusion if each has qualifying retirement income in their own name.
For the mechanics of required withdrawals in retirement, see what is an RMD.
Sources
- Oklahoma taxation of retirement income (Social Security, pensions, 401(k)/IRA): Oklahoma Department of Revenue / Taxation.