What is the sales tax rate in Oklahoma?
The sales tax rate in Oklahoma is composed of a state sales tax rate and additional local sales tax rates that are determined by the county or city in which the business operates or the sale occurs.
The state sales tax rate in Oklahoma is 4.5%. However, local tax jurisdictions (cities and counties) may levy additional sales taxes, which can vary significantly. As a result, the combined sales tax rate in Oklahoma can range from 4.5% to over 11% in some areas.
When calculating sales tax, businesses should consider both the state sales tax rate and any applicable local rates. For example, if a business operates in a city with a local tax rate of 2%, the combined sales tax rate would be 6.5% (state tax rate of 4.5% + local tax rate of 2%).
As local sales tax rates are subject to change, it is essential to verify the current rates with the Oklahoma Tax Commission or through a reliable sales tax software solution.
Sales Tax Oklahoma: When should your business start collecting Sales Tax in Oklahoma?
If your business has a physical presence (also known as a nexus) in Oklahoma or meets the economic nexus threshold, you are required to collect sales tax from customers on taxable transactions.
In Oklahoma, sales tax is primarily levied on tangible personal property and certain services. So generally, if your business sells tangible goods or provides taxable services in Oklahoma, you are required to collect and remit sales tax.
The Oklahoma Tax Commission provides a list of taxable services, which includes services such as telecommunication services, installation, repair, and maintenance of tangible personal property, among others.
Keep in mind that sales tax exemptions may apply to specific transactions or customers. For example, sales to government entities, non-profit organizations, and certain agricultural products may be exempt from sales tax. It’s essential to verify any exemptions with the Oklahoma Tax Commission.
Oklahoma Physical Sales Tax Nexus
Physical sales tax nexus occurs when a business has a direct physical connection to a state, such as an office, warehouse, or employees. In Oklahoma, your business may have a physical nexus if it:
Sales Tax Physical Nexus checklist for Oklahoma
Here’s a checklist to help you determine if your business has a physical sales tax nexus in Oklahoma:
- Do you have a business location in Oklahoma (office, retail store, etc.)?
- Do you store inventory or goods in Oklahoma, including using a third-party fulfillment center or warehouse?
- Do you have employees, contractors, or agents working in Oklahoma?
- Have you attended trade shows, fairs, or events in Oklahoma where sales occurred?
So if you answered “yes” to any of these questions, your business likely has a physical nexus in Oklahoma and is required to collect and remit sales tax.
Oklahoma Economic Nexus Threshold: Revenue, Thresholds and Transactions
Economic nexus is a concept that allows a state to require out-of-state businesses to collect and remit sales tax based on their sales volume or transaction count, rather than physical presence.
In Oklahoma, the economic nexus threshold is set at $100,000 in annual gross revenue from sales into the state. This includes both taxable and nontaxable sales. If your business surpasses this threshold, you will have economic nexus in Oklahoma and are required to collect and remit sales tax on sales made to customers in the state.
Which services are taxable in Oklahoma?
Oklahoma applies sales tax to a wide range of services, including some that are not commonly taxed in other states. Taxable services in Oklahoma include:
- Telecommunications services
- Installation, maintenance, and repair of tangible personal property
- Computer services
- Rental or lease of tangible personal property
- Admission fees to places of amusement, sports, and recreation
Keep in mind that some services are exempt from sales tax, such as professional services (e.g., legal, accounting, medical) as well as certain labor services. So it’s important to consult with the Oklahoma Tax Commission to determine the taxability of your business’s services.
Oklahoma Sales Tax on Products: How to Calculate What Your Business Should be Charging
To calculate sales tax on products in Oklahoma, follow these steps:
- Determine the taxable base: Include the cost of the product, any shipping or handling charges, and any additional fees or charges associated with the sale.
- Identify the applicable tax rate: Find the combined state and local sales tax rate for the location where the product is delivered or where the sale takes place.
- Calculate the tax amount: Multiply the taxable base by the applicable tax rate.
Example: If you sell a product for $100, with a $10 shipping charge, and the combined sales tax rate is 8.5%, the total tax due would be $9.35 [(100 + 10) * 0.085].
How much is Oklahoma clothing tax?
In Oklahoma, the sales tax rate for clothing is the same as the general sales tax rate, which is 4.5% at the state level. Local tax jurisdictions (cities and counties) may impose additional sales taxes, so the total sales tax rate on clothing can vary depending on the location of the sale.
Oklahoma Online Sales Tax: SaaS Sales Tax Oklahoma and the Taxability of Digital Services
In Oklahoma, Software as a Service (SaaS) and digital services are generally exempt from sales tax. This means that businesses providing SaaS or other digital services to customers in Oklahoma are typically not required to collect and remit sales tax.
But online sales tax legislation is quickly evolving and adapting to the digital world, so something like Oklahoma SaaS Sales Tax may soon become part of the compliance journey. As such, it’s important for businesses to stay up to date with the latest sales tax laws.
How can a business get a sales tax permit in Oklahoma?
To collect sales tax in Oklahoma, businesses must first obtain a sales tax permit from the Oklahoma Tax Commission. Follow these steps:
- Register your business with the Oklahoma Secretary of State if required (e.g., corporations, LLCs).
- Apply for a sales tax permit online through the Oklahoma Tax Commission website or submit a paper application (Form 13-16).
- Provide the required information, including your business name, EIN or SSN, business address, business structure, and estimated monthly sales tax liability.
- Submit the application and wait for approval. There is no fee to obtain a sales tax permit in Oklahoma.
Collecting Sales Tax in Oklahoma as a Business
Once you have a sales tax permit, you must collect sales tax on taxable sales made to customers in Oklahoma. Ensure you are collecting the correct tax rate, considering both state and local taxes. Remember to include shipping and handling charges in the taxable base when calculating sales tax.
Oklahoma Tax Return Due Dates Explained
In Oklahoma, sales tax returns can be filed monthly, quarterly, or annually, depending on your sales tax liability. You will be assigned a filing frequency when you register for a sales tax permit.
- Monthly returns are due by the 20th of the following month.
- Quarterly returns are due by the 20th of the month following the end of the quarter.
- Annual returns are due by January 20th of the following year.
What is the required frequency for sales tax returns in Oklahoma?
The required frequency for filing sales tax returns in Oklahoma depends on your sales tax liability. Businesses with higher sales tax liability will typically file monthly, while those with lower liability may file quarterly or annually.
