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Bill

SB 44

Sales tax; extending sales tax exemption to contractors in connection to performance of a contract with a tax exempt entity. Effective date.

2026 Regular Session Introduced by Scott Fetgatter and 1 co-sponsor

Oklahoma bill exempts contractors from sales tax when working on contracts with tax-exempt organizations, reducing state revenue but lowering costs for nonprofits and government entities.

CR; Do Pass Appropriations and Budget Committee
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WeVote Research Nonpartisan
Bill Summary · SB 44

Legislative bill overview

SB 44 extends Oklahoma's sales tax exemption to contractors who perform work under contracts with tax-exempt entities (such as nonprofits, government agencies, and educational institutions). Currently, only the tax-exempt entity itself may qualify for exemptions; this bill would expand that benefit to their contractors. The measure passed the Senate with broad support (36-8) and is now in House consideration.

Why is this important

This change could reduce costs for tax-exempt organizations by allowing their contractors to avoid sales tax on materials and services, potentially lowering project expenses for nonprofits, schools, and government agencies. Conversely, it represents foregone state tax revenue that would otherwise support public services, shifting the tax burden to other taxpayers or reducing available funding.

Potential points of contention

  • Revenue impact: The bill reduces state sales tax collection without identified offsetting funding sources, affecting the state budget during appropriations consideration
  • Definition and scope creep: Determining which contractors qualify and what work falls under "performance of a contract" could create administrative complexity and potential disputes
  • Competitive fairness: For-profit contractors working for tax-exempt entities gain an advantage over those serving taxable customers, potentially distorting market competition

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

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