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Category: Oklahoma

Oklahoma Adjustments- Schedule 511-C

Military Pay Exclusion

Oklahoma residents who are members of any component of the Armed Services may exclude 100% of their active military pay (includes Reserve & National Guard pay), to the extent such pay is included in the Federal Adjusted Gross Income.  Retired military see instructions for Schedule 511-A, line 4.


Qualifying Disability Deduction

If you have a physical disability constituting a substantial handicap to employment, you may deduct the expense incurred to modify a motor vehicle, home, or work place necessary to compensate for the disability. Please enclose a schedule detailing the expenses incurred and a description of the physical disability with documentation regarding the Social Security Administration recognition and/or allowance of this expense.


Qualified Adoption Expense

An Oklahoma resident may deduct “nonrecurring adoption expenses” not to exceed $20,000 per calendar year (Title 68 O.S. Section 2358). Expenses are to be deducted in the year incurred. “Nonrecurring adoption expenses” means adoption fees, court costs, medical expenses, attorney fees and expenses which are directly related to the legal process of adoption of a child. Enclose a schedule describing the expenses claimed.


Contributions to Oklahoma 529 College Savings Plan & OklahomaDream 529  Account(s)

Each individual may deduct contributions made to accounts established pursuant to the Oklahoma College Savings Plan Act. The maximum annual deduction is the amount of contributions to all Oklahoma 529 College Savings Plan accounts plus any contributions to such accounts for prior tax years after December 31, 2004, which were not deducted. If a rollover* or non-qualified withdrawal is taken within the same tax year as a contribution is made, the deduction for such contribution must be reduced by the amount of the rollover or non-qualified withdrawal. In no event can this deduction exceed $10,000 ($20,000 on a joint return) per tax year.

Any amount of a contribution that is not deducted in the year for which the contribution is made may be carried forward as a deduction from income for the succeeding five years. If a rollover* or non-qualified withdrawal is taken during the carryover period the tax deduction otherwise available must be reduced by the amount of the rollover or nonqualified withdrawal. Deductions may be taken for contributions and rollovers made during a taxable year and up to April 15 of the succeeding year, or the due date of a taxpayer’s state income tax return, excluding extensions, whichever is later. A deduction for the same contributions may not be taken for two different tax years. Enclose proof of your contribution including the name of the beneficiary and the account number.

*For purposes of reducing the deduction, “rollover” means the transfer of funds from the Oklahoma College Savings Plan to any other plan under Section 529 of the Internal Revenue Code. Contributions must be made to Oklahoma 529 College Savings Plan account(s). Contributions made to another state’s college savings plans, the Coverdell Education Savings Account or transfers from one Oklahoma 529 College Savings Plan account to another, may not be deducted.


 Deduction for Providing Foster Care

If you contract with a child-placing agency, as defined in 10 OS Sec. 402, you may deduct $5,000 for expenses incurred providing foster care. Married persons filing separately in a year in which they could have filed a joint return may each claim only $2,500.



Miscellaneous Other Oklahoma Adjustments

  1. Qualified Medical Savings Account/Health Savings Account - Contributions made to, and interest earned from, an Oklahoma medical savings account established in Oklahoma, pursuant to 63 OS Sec. 2621 through 2623, shall be exempt from taxation. In order to be eligible for this deduction, contributions must be made to a medical savings account program approved by either the State Department of Health or the Insurance Commissioner. Contributions made to, and interest earned from, and Oklahoma Health Savings Account established in Oklahoma, pursuant to 36 OS Sec. 6060.18, shall be exempt from taxation. Note: If you took a Health/Medical Savings Account deduction to arrive at Federal AGI, you cannot take a deduction on this line.
  2. Agricultural Commodity Processing Facility- Owners of agricultural commodity processing facilities may exclude 15% of their investment in a new or expanded agricultural commodity processing facility located within Oklahoma. Under no circumstances shall this exclusion lower your taxable income below zero. In the event the exclusion does exceed income, any unused portion may be carried over for a period not to exceed six years.
  3. Depreciation Adjustment for Swine or Poultry- Individuals who are swine or poultry producers may deduct depreciation on an accelerated basis for new construction or expansion costs. The same depreciation method elected for Federal income tax purposes will be used, except the assets will be deemed to have a 7-year life.
  4. Discharge of indebtedness for Farmers- An individual, engaged in production of agriculture, may exclude income resulting form the discharge of indebtedness incurred to finance the production of agricultural products. Include Federal Schedule F and 1099-C.
  5. OK Police Corps Program Scholarship/Stipend- You may deduct any scholarship or stipend, received from participation in the OK Police Corps Program, that is included in your Federal AGI.
  6. Deduction for Living Organ Donation- You may deduct up to $10,000 of unreimbursed expenses if you, or your dependent, donates one or more human organs while living. "Human organs" means all or part of a liver, pancreas, kidney, intestine, lung or bone marrow. The deduction is allowed only one time and may be claimed only for unreimbursed expenses that are incurred by you and related to the organ donation of you or your dependent.
  7. Safety Pays OSHA Consultation Service- An employer that is eligible for an utilizes the Safety Pays OSHA Consultation Service provided by the OK Dept. of Labor shall receive a $1,000 exemption for the tax year the service is utilized.
  8. Qualified Refinery Property- If a qualified OK refinery elected to expense the cost of qualified refinery property, enter any of such expense allocated to you.
  9. Cost of Complying with Sulfur Regulations- If a qualified refinery elected to allocate all or a portion of the cost of complying with sulfur regulations to its owner, enter the portion of such cost allocated to you.
  10. EMT Death Benefit exclusion- The $5,000 death benefit, paid to the designated beneficiary of an emergency medical technician or a registered emergency medical responder whose death is a result of their official duties performed in the line of duty is exempt. Deduct the $5,000 death benefit if such death benefit is included in your Federal AGI.
  11. Competitive Livestock Show Award- You may deduct any payment of less than $600 received as an award for participation in a competitive livestock show event if such award is included in your Federal AGI. You must be able to substantiate this deduction upon request.
  12. Discharge of indebtedness under IRC Section 108(i)(1): Income from discharge of indebtedness deferred under IRC Section 108(i)(1), which was added back to compute Oklahoma taxable income in tax year 2010, may be partially deducted. Deduct an amount equal to the portion of such deferred income included in your Federal Adjusted Gross Income for tax year 2016.  If you are deducting this income as a member of a pass-through entity, include such entity’s name and ID number and your pro-rata share of the deferred income.
  13. Indian Employment Exclusion: All qualified wages equal to the Federal Indian Employment Credit, set forth in IRC Section 45A, shall be deducted from taxable income.