At a glance
Calculation
Oklahoma has a statewide base sales tax rate of 4.5%. On top of this, local jurisdictions like cities, counties, and special districts can impose their own sales tax. Combined local taxes can add as much as 7% to the total sales tax rate.
So when state and local rates are combined, sales tax rates across Oklahoma range from 4.5% (in areas with no local taxes) to 11.5% (in areas with the maximum additional local taxes). Businesses that make taxable sales in Oklahoma must collect both state and applicable local sales taxes.
The Oklahoma Tax Commission administers sales tax in the state. Sellers who reach $100,000 in annual sales in Oklahoma are considered to have economic nexus and must collect and remit tax. The commission offers resources online and over the phone to help businesses comply.
FAQs
How do you calculate Oklahoma sales tax?
To calculate Oklahoma sales tax, multiply the purchase price by the combined state and local tax rate(s) for that jurisdiction. For example, in the city of Tulsa, three tax rates apply: the state tax (4.5%), a city tax (3.65%), and a county tax (0.367%). The combined sales tax rate in the city of Tulsa is, therefore, 8.517%. So if a taxable item costs $100, a Tulsa customer would pay a sales tax of $8.52 (8.517% rounded up to the nearest cent).
What are the penalties for not paying?
Penalties for failing to pay Oklahoma sales tax can include fines of up to 10% of the unpaid taxes plus interest charges of 1.25% per month. Criminal charges may also apply for willful violations.
What's the difference between destination-based and origin-based sales tax states?
In destination-based sales tax states like Oklahoma, the sales tax rate is determined based on the address of the buyer. In origin-based states, sales tax is based on the seller's location.
Is Oklahoma a streamlined sales tax state?
Yes, Oklahoma is a full member state of the Streamlined Sales and Use Tax Agreement (SSUTA).
Nexus
Physical presence
Sellers with a physical presence in Oklahoma must collect and remit sales tax. This includes having inventory or employees in the state, making sales trips into the state, and owning property in the state.
Economic nexus
Out-of-state sellers with no physical presence in Oklahoma may still have economic nexus if they have reached a threshold of $100,000 or more in retail sales in a year.
FAQs
Do I need an Oklahoma seller's permit if I’m only a wholesaler?
Yes, wholesalers in Oklahoma need to register for a sales tax permit even if they sell only to other businesses. The buyers are still responsible for reporting and paying use tax.
Do I need an Oklahoma seller's permit if I sell in the state only temporarily?
Yes, even temporary sellers need to register and collect Oklahoma sales tax if they meet sales tax nexus thresholds. There is no exception for temporary sales.
Exemptions
Some exemptions include:
- Prescription drugs
- Medical equipment
- Agricultural equipment
- Manufacturing equipment
See the full list on the Oklahoma Tax Commission website.
FAQs
Are groceries taxable?
Most groceries are exempt from state sales tax in Oklahoma, including meat, dairy products, vegetables, bread, cereal, and more household food items. Some prepared foods may be taxable. Some grocery items may be subject to local sales tax in certain jurisdictions.
Is clothing taxable?
Clothing and footwear priced under $100 are exempt from sales tax during Oklahoma's annual sales tax holiday in August. Otherwise, clothing is generally taxable year-round.
Are digital products taxable?
No. In Oklahoma, most digital products are not taxable when delivered electronically. This includes software, e-books, music, and streaming services.
Is software-as-a-service (SaaS) taxable?
No, SaaS and other online software services are not subject to Oklahoma sales tax.
Are services taxable?
Most services are not taxable in Oklahoma. However, any services that involve producing tangible personal property may be taxable.
Excise taxes
Oklahoma levies selective excise taxes on specific goods and products like motor fuel, tobacco, alcohol, and medical marijuana.
Motor fuel excise tax
- Gasoline: $0.16 per gallon
- Diesel: $0.19 per gallon
- CNG: $0.16 per gallon or GGE (gasoline gallon equivalent)
In addition, Oklahoma counties can charge up to $0.02 per gallon in additional gasoline/diesel taxes that sellers must collect.
Tobacco excise tax
Oklahoma levies a variable rate tax on tobacco products; rates are based on product type and price:
- Cigarettes: $2.03 per pack of 20 cigarettes
- Other tobacco products are taxed at between 25% and 75% of the product price, depending on type
Alcohol excise tax
Excise tax rates on alcoholic beverages in Oklahoma:
- Beer: $12.5 per barrel
- Wine: Up to $0.55 cents per liter
- Spirits: $1.47 per gallon
Municipalities and counties can also charge local marijuana taxes up to an additional 2% on retail sales.
Remote sellers
Remote sellers with more than $100,000 in Oklahoma sales have economic nexus and must collect and remit sales tax. Oklahoma also has marketplace facilitator laws requiring the collection of sales tax on marketplace sales.
Discretionary taxes (local sales taxes)
Hundreds of cities and counties in Oklahoma charge additional local sales taxes. Rates vary; the highest rate is 7%. Sellers must collect both state and local sales tax based on the ship-to address.
Collecting sales tax
Collecting sales tax in Oklahoma involves registering for a permit, charging the correct rates at checkout, filing returns, and remitting taxes on time.
How to collect Oklahoma sales tax if you are not located in Oklahoma (out-of-state sellers):
Even without a physical presence, out-of-state sellers must collect Oklahoma sales tax once they meet the $100,000 economic nexus threshold. To get started:
- Register for an Oklahoma sales tax permit with the Oklahoma Tax Commission. This establishes you as a collector agent for the state.
- Integrate sales tax calculations into your checkout process. Rates will vary by customer shipping location, so address-level precision is important.
- File Oklahoma sales tax returns reporting your total taxable sales and tax collected. This is usually done monthly or quarterly.
- Remit the sales tax you collected to the Oklahoma Tax Commission.
Simplified solutions like Numeral handle registrations, tax calculations, filing, and remittance for you automatically — so you can spend only five minutes a month managing your sales tax responsibilities.
Should you collect sales tax on shipping charges in Oklahoma?
If shipping fees are separately stated on the invoice, they are not subject to Oklahoma sales tax. However, if you include shipping charges in the overall order total, they become part of the taxable amount.
It's important to understand when shipping charges should or should not be taxed. Reaching out to an Oklahoma sales tax professional can help clarify the precise rules for your business.
Filing and remitting
Properly filing returns and remitting collected sales tax to the state is a critical compliance responsibility for Oklahoma businesses.
The process involves:
- Calculating your total taxable Oklahoma sales and the sales tax collected for each filing period.
- Filing an Oklahoma sales tax return detailing your taxable transactions and tax owed. This is submitted to the Oklahoma Tax Commission.
- Remitting the sales tax dollars your business collected to the state. This payment should match what's on your filed return.
Filing schedule and due dates
The Oklahoma Tax Commission sets filing frequencies based on business size and tax revenues:
Monthly filing: For businesses that collect $2,500 or more in sales tax per month, returns are due by the 20th of the following month.
Semi-annual filing: Smaller sellers collecting less than $50 per month can request semi-annual filing. Returns covering January-to-June sales are due by July 20, with returns covering July-to-December sales are due by January 20.
Monthly return due dates
Semi-Annual Return Due Dates
Penalties for late filing or late payments
If you file your Oklahoma sales tax return late, you may face these penalties:
- Late filing penalty: 10% of unpaid taxes
- Late payment penalty: 1.25% interest per month
It's critical to file on time even if you can't pay the full amount due. The penalties and interest add up quickly.
I didn’t collect any Oklahoma sales tax during this period. Do I still need to file a return?
Yes, you must file $0 or "no tax due" returns in Oklahoma for periods with no taxable sales or tax collected. Failing to file returns can lead to non-filing penalties.
Can I amend a sales tax return?
Yes, you can file an amended Oklahoma return to correct errors or report additional tax due from a prior period. Amended returns should be filed online via the Tax Commission's Taxpayer Access Point (OkTAP) or using form BT-AMES. You'll owe any additional tax plus interest and may face penalties.
Audit and appeals process
If your business is selected for an Oklahoma sales and use tax audit, you'll go through a multi-step process including a review of your records, an assessment of any additional taxes owed, and opportunities to appeal the audit findings.
Audit process
The key steps in an Oklahoma sales tax audit are:
- Notification: You'll receive an initial Notification of Intent to Audit from the Oklahoma Tax Commission.
- Pre-audit research: The auditor gathers information and prepares before contacting you.
- Entrance conference (optional): The auditor may hold an introductory entrance conference.
- Records review: The auditor thoroughly reviews your Oklahoma tax returns, exemptions claimed, and relevant financial records.
- Additional assessment: If the audit uncovers issues, the auditor calculates taxes, penalties, and interest owed in a proposed assessment.
- Contesting findings (optional): You can contest the audit findings and proposed assessment with the auditor.
- Final assessment: A final Notice of Assessment is issued detailing taxes, penalties, and interest due.
- Appeal or payment: If you still disagree, you have the option of filing a formal appeal within 60 days or pay the amount owed.
What to expect during the audit?
The auditor will request many records, such as sales invoices, bank statements, tax returns, and details on out-of-state and exempt sales. They will compare your reported taxable sales and taxes remitted with total business revenues to uncover unreported tax liabilities. Expect a thorough review.
After the audit: Appealing the results
If you disagree with the final assessment, you can file a formal appeal with the Oklahoma Tax Commission within 60 days. This starts a legal process allowing you to contest the audit findings. Working with an experienced Oklahoma sales tax representative for the appeals process is advisable.
Sales tax registration
Registering for a sales tax permit establishes your business as a collector of taxes on behalf of the state. Here's what Oklahoma sellers need to know:
How to register
You can register online for an Oklahoma sales tax permit through the Tax Commission's Taxpayer Access Point (OkTAP) system. You'll need to provide:
- Business information (including name, address, and EIN)
- Ownership information
- Date activities began
- Products sold
- Projected monthly sales
There is a $20 registration fee when applying for an Oklahoma seller's permit.
Registration requirements for online sellers
Out-of-state online sellers must collect Oklahoma sales tax once they exceed $100,000 in annual sales. So registering is critical upon meeting this remote seller economic nexus threshold.
Cost of registration
It costs $20 to register for a standard Oklahoma sales tax permit. Additional fees may apply in certain situations.
More Information & Contacts
- Oklahoma Tax Commission
- Phone: (405) 521-3160
- Website: https://oklahoma.gov/tax.html
Automating the entire sales tax management process with solutions like Numeral can save time and unnecessary costs. They take care of registrations, tax calculations, filing, and more, so you have to spend just five minutes or less each month on sales tax compliance.
