Oklahoma Sales Tax
Oklahoma Sales Tax At a Glance
State rate: 4.5%
Maximum combined rate: 11.5%
Tax Holidays: Back to School sales tax holiday – August
Governing Body: Oklahoma Tax Commission
The State of Oklahoma has what can be at times complicated sales tax regulations that differ depending on both county and city. From determining if you have nexus in the state to calculating the amount that needs to be collected, there are several factors to consider.
Oklahoma Sales Tax Rates
The base sales tax rate in Oklahoma is 4.5%. However, there are additional local sales tax rates in both the counties and major cities of Oklahoma. As a result, the combined local sales tax rate can vary quite a bit based on zip code. For example, in Oklahoma City, the combined rate is 8.625%, and in Muskogee, it is 9.15%. There are several additional factors involved as well, including the types of goods being purchased and the method through which they are purchased.
Oklahoma is a destination-based state, meaning sales tax is charged based on the location of the recipient of a shipped good. Another important factor to consider is remote seller status. If you are not based in Oklahoma but are determined to have nexus in the state, you are considered a Remote Seller and must collect “use tax” which can vary from sales taxes and must be calculated separately. The Oklahoma Tax Commission offers more detail on these rates and how they apply to different types of small businesses.
Oklahoma Sales Tax Nexus
Before collecting sales taxes in Oklahoma, you must determine if you have nexus in the state. This refers to anyone who currently has business operations in the state as defined by:
- Maintaining an office or place of business in Oklahoma
- Storing goods in a warehouse or distribution center in Oklahoma
- Retaining or employing a salesperson or contractor who does business in Oklahoma
- Delivery of merchandise to Oklahoma in taxpayer-owned vehicles
In addition to the above qualifications a 2016 law was passed called the Oklahoma Retail Protection Act. This new law is designed to assign sales tax nexus even to those out-of-state sellers who have no presence in the state under the standard guidelines. The new law makes three important changes:
- It clarifies what constitutes nexus in the form of physical space used by the seller in the state.
- It requires all out-of-state sellers who were not required to charge sales tax to provide an annual statement to buyers for those non-taxed purchases. This form isn’t required to go to the State yet, however.
In addition to the Retail Protection Act, Oklahoma passed economic nexus guidelines that went into effect in November 2019. The new guidelines, implemented following the Wayfair Supreme Court ruling, labels all vendors who sell $100,000 or more in tangible physical property within Oklahoma over 12 months as having nexus and require them to collect and remit sales taxes.
Goods Eligible for Oklahoma Sales Tax
Like most states, Oklahoma only assesses sales tax on certain goods. So it’s important to know if what you are selling even applies.
- Services – Services are generally not subject to sales tax in the state. However, there are some exceptions, including the manufacturing of a product, even with heavy customization. It’s important to fully review the list of services that are subject to sales tax in the state before determining your status.
- Prescription Drugs and Some Medical Supplies – The sole exceptions to sales tax on physical goods in Oklahoma are certain types of prescription medications and medical supplies.
- Annual Sales Tax Holiday – Oklahoma offers an annual sales tax holiday in August for Back to School shopping. The holiday applies to any article of clothing or footwear with a sales price of less than $100.
There are only a small number of exceptions in the state. Combined with the updated and refined nexus laws, it’s important to ensure you know exactly what goods or services you offer that might be subject to Oklahoma sales tax.
For any small business that is considered to have sales tax nexus in the state, you must register for an Oklahoma sales tax permit to ensure tax compliance. To do so, you can register directly through the state’s online portal at The Taxpayer Access Point. There is also a paper application available in Packet A – Oklahoma’s business registration paperwork. Be sure to check for this on the Oklahoma Tax Commission website, however, to ensure it is still available. Oklahoma also allows businesses to file in person in Oklahoma City or Tulsa.
To complete the form, you will need all of your relevant business information, including business identification and personal identification numbers, business entity type, date of incorporation, and a list of the types of products you sell. There is a $20 application fee for filing the application as well, and it will take a minimum of 5 days to process the permit (when filed online). It is possible to have it processed sooner if you file in person.
The initial permit you receive is on a probationary period of six months. The permit automatically renews after the initial period for 30 months.
Tax compliance requires that sales tax is collected and filed in the following ways:
- For Those in State – Oklahoma is a destination-based state, meaning you will charge sales tax based on the location of the recipient of the goods shipped. This requires a table for application of the right rates in each county and city.
- Shipping – Shipping and handling are not taxable if they are listed separately on invoices. If they are included in the price of the product to the customer, then the total will be subject to sales tax.
- Remote Seller – Remote sellers (those outside of Oklahoma without nexus), are considered remote sellers and must report use tax to the buyer. The state strongly encourages these retailers to collect this tax on their behalf. Remote sellers who make $100,000 or more in sales within Oklahoma in 12 months are required to collect and remit sales tax as well.
- Filing Your Return – Oklahoma State sales tax returns are filed either online via the Oklahoma TAP system or by mail with form STS-20002. If you have a tax liability of more than $2500 per month, however, online filing is required.
When you apply for your sales tax application, you will be assigned a payment frequency based on the total sales tax collected. This number will be updated on a routine basis if your liability changes.
- Semi-Annual – Less than $50 per month
- Quarterly or Monthly – More than $50 per month (will be determined by the State)
- Semi-monthly – May apply to those with a high liability
By default, most businesses are assigned a monthly filing frequency that can be updated per the total liability. Those with $2500/month or more will be required to pay via EFT.
Quarterly: Quarterly filing deadlines are:
|January – March (Q1)||April 20|
|April – June (Q2)||July 20|
|July – September (Q3)||October 20|
|October – December (Q4)||January 20|
Monthly: Monthly filing deadlines are:
Semi-Annual: For businesses with a tax liability of $50/year or less, semi-annual filing is required on July 20 and January 22 of the following year.
Penalties and Interest for Late Payments
Those who register for sales tax collection in Oklahoma are legally required to file by the above-listed deadlines or face a potential penalty. The late filing penalty for those who do not file within 10 days after a written demand is 25% of the tax due. The late payment penalty is 10% of the tax due when not paid within 15 days of delinquency.
There may be more severe penalties or even criminal charges for those who miss filing or payment repeatedly.
Zero returns are required to be filed on your indicated due date regardless of whether you have liability. However, those who do pay on time will also receive a 1% discount on sales tax owed with a maximum discount of $2500 per month.
Oklahoma Sales Tax Software
Because of the complexity of Oklahoma’s sales tax collection process, with a base state rate, county and city rates based on zip codes, and remote seller status for out of state sellers, there are a lot of factors to consider. It’s important to have a system in place that can quickly manage the different rates, filing deadlines, tax holidays, and shifting laws in the state. The TaxTools suite of tools, including a tax calculator, offers such resources, allowing you to easily review sales tax data, ensure proper payments are made on time, and that everything integrates effectively with your existing eCommerce platform. With a single portal that offers comprehensive integration with the Oklahoma sales tax system, it’s much easier to manage your online sales, especially when selling in multiple states. To learn more about TaxTools or sign up for a free trial, click here and start evaluating the software for your business.
Last updated May 2022