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SB 324

Incentives; creating the Oklahoma Research and Development Rebate Fund; prescribing sources of funds; creating a research and development rebate program; authorizing promulgation of rules.

2026 Regular Session Introduced by Brian Hill and 1 co-sponsor

Oklahoma creates a 5% nonrefundable state income tax credit for qualified R&D expenditures and a separate 5% rebate program funded to reimburse eligible Oklahoma R&D costs, with a

Filed with Secretary of State
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Bill Summary · SB 324

Overview

Senate Bill 324 (SB 324), introduced in the Oklahoma Legislature (2025 session; effective date 2025-11-01 for the tax credit portion and 2025-07-01 for the rebate fund portion in the engrossed version), creates two related initiatives designed to incentivize research and development (R&D) activity in Oklahoma:

  • A new state income tax credit for qualified research expenditures.
  • A parallel, separate Oklahoma Research and Development Rebate Fund and rebate program administered by the Department of Commerce to reimburse eligible establishments for a portion of their qualified research expenditures.

The bill has undergone amendments and emergency provisions during the legislative process, including a veto and override in the record, and an engrossed version outlining the rebate fund structure.

1) Main purpose and intent

  • To promote investment in research and development within Oklahoma by providing financial incentives to eligible businesses.
  • To support both a monetary tax credit against Oklahoma income tax liability and a direct rebate program funded from a dedicated state treasury fund.
  • To create a framework for administration, eligibility, and monetization of these incentives, with rules to be promulgated by the Oklahoma Department of Commerce (ODOC).

2) Key provisions and changes

A. Income tax credit for qualified research expenditures (QREs)

  • Defined term: “Qualified research expenditures” align with the amounts claimed on federal Form 6765 (for the applicable tax year), limited to expenses incurred in Oklahoma.
  • Credit amount: For tax years 2026 and onward, a 5% credit against the Oklahoma income tax liability (as defined in Title 68, Sec. 2355).
  • Nonrefundable credit: The credit may not reduce tax liability below zero.
  • Carryforward: Any unused credit may be carried forward for up to five subsequent tax years.

B. Oklahoma Research and Development Rebate Fund and rebate program

  • Establishment of a revolving fund in the State Treasury named the “Oklahoma Research and Development Rebate Fund.”
  • Fund purpose: To reimburse qualified establishments for their qualified research expenditures; funds are continuing and not limited to a particular fiscal year.
  • Administration: The program is administered by the Oklahoma Department of Commerce.
  • Eligibility (establishments must meet all of the following):
    • Submit an application and required documentation to the Department.
    • Provide documentation showing that the R&D expenditures occurred in Oklahoma.
    • Have filed all required Oklahoma tax returns.
  • Rebate calculation: Rebates equal 5% of the establishment’s qualified research expenditures.
  • Payment priority and limits:
    • Rebates paid in the order of receipt, subject to available fund balance.
    • The total rebates in any fiscal year may not exceed $20 million.
    • If a rebate claim surpasses available funds or the annual cap, payment may be prorated; unapproved claims may be paid in a future fiscal year.
  • Rulemaking: The Oklahoma Department of Commerce may promulgate rules to implement the rebate provisions.
  • Effective and emergency provisions: The bill is designed to take effect in mid-2025 (with certain sections effective July 1, 2025 and others later per the enacted version). An emergency clause was included in earlier versions to hasten effect, although amendments (including an Engrossed House Amendment) indicate some changes to structure and effective dates.

3) Who and what is affected

  • Businesses engaging in qualified research expenditures in Oklahoma:
    • Eligible for a 5% income tax credit against Oklahoma corporate or individual income tax, subject to nonrefundable constraint and carryforward provisions.
    • Eligible to apply for rebates from the Oklahoma Research and Development Rebate Fund if they meet program requirements.
  • Oklahoma Department of Commerce:
    • Responsible for administering the rebate program, processing applications, and promulgating implementing rules.
  • Oklahoma taxpayers:
    • Individuals and entities with taxable income in Oklahoma may utilize the 5% QRE tax credit (subject to the nonrefundable limit).
  • State finances:
    • Creation of a dedicated revolving fund with annual cap on rebates ($20 million per fiscal year) and a statutory framework to reimburse eligible entities.

4) Procedural and timeline aspects

  • Tax credit:
    • Effective for tax year 2026 and subsequent years.
    • Credit amount: 5% of QREs; nonrefundable; carryforward up to five years.
  • Rebate fund and program:
    • Establishment and administration provisions reference an effective date around July 1, 2025 (per the Engrossed Senate version), with the program designed to reimburse qualified expenditures at 5% of QREs.
    • Annual rebate cap: $20,000,000; funds allocated by the Department of Commerce; payments made in order of receipt.
    • Possible prorating if funds are insufficient in a given year; unused funds may be carried forward into future years subject to fund balance.
  • Rules and governance:
    • ODOC may promulgate rules to implement both credit and rebate provisions.

Potential impact and considerations

  • Economic impact: The combination of a nonrefundable 5% tax credit and a 5% rebate program aims to encourage private sector R&D investment within Oklahoma, potentially expanding innovation activity and job creation.
  • Fiscal impact: The rebate program imposes a hard annual cap ($20 million) on funded rebates, creating a nontrivial constraint on the program's reach. The tax credit reduces state tax revenue correspondingly but is nonrefundable and subject to carryforward.
  • Administrative considerations: Detailed eligibility criteria, documentation standards, and rulemaking by ODOC will determine practical uptake and administration efficiency.
  • Policy alignment: The paired tax credit and rebate program provides both a credit mechanism and a direct grant-like rebate, offering multiple avenues for supporting R&D activity.

If you’d like, I can provide a side-by-side comparison with similar R&D incentives in neighboring states, or a brief impact assessment scenario using hypothetical company expenditures.

Compiled from official sources — confirm details with the bill’s official record.

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