For tax years 2019-2025, Oklahoma has created three new income tax credits for employers and employees in the vehicle manufacturing industry. In order to qualify for the credits, an employee must be:
- employed or contracting in Oklahoma on or after January 1 2018; and
- awarded an undergraduate or graduate degree.
However, an employee will not qualify if the employee was employed in vehicle manufacturing in Oklahoma immediately before working for with a qualified employer.
Employer Paid Tuition Reimbursement Tax Credit
A nonrefundable credit is available to qualified employers for 50% of tuition reimbursement to a qualified employee. An employer can claim the credit if the employee receives an undergraduate or graduate degree within one year of starting employment. In addition, the credit can be claimed for the first through fourth year of employment.
Employer Payroll Tax Credit
A nonrefundable credit is available for compensation paid for the first through fifth years of employment in vehicle manufacturing. The credit is equal to:
- 10% of the compensation paid if the employee graduated from an Oklahoma school; or
- 5% of the compensation paid if the employee graduated from an out-of-state school.
However, the credit is capped at $12,500 annually for each qualified employee.
Employee Engineer Tax Credit
Vehicle manufacturing engineers may claim a nonrefundable credit of $5,000 per year for up to five years of employment. Unused credits may be carried over for five subsequent tax years.
Annual Credit Caps
The tuition reimbursement and payroll tax credits are capped at $3 million per year. The employee engineer tax credit is capped at $2 million per year.
S.B. 1585, Laws 2018, effective November 1, 2018