Oklahoma LLC Taxes

When establishing an Oklahoma limited liability company (LLC), certain tax requirements apply based on your tax classification and business activities. 

In this guide, we provide an outline of all the key Oklahoma LLC Taxes at the local, state, and federal levels, including the necessary steps on how to file your taxes properly and keep your LLC tax-compliant.

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

How Is an LLC Taxed in Oklahoma?

Taxation in Oklahoma isn’t applied in the same way to all LLCs – instead, it varies depending on a number of factors, such as an LLC’s nature, locality, and tax election.

While LLCs typically benefit from pass-through taxation by default, they can elect to be taxed as one of the following:

• C Corporations: The LLC is treated as a separate entity to its owners, paying corporate income tax rates on its total profit while the owners also pay income taxes on any distributions they take using their individual returns.
• S Corporations: In return for paying owners a “reasonable salary,” the LLC’s remaining profits are distributed among members without a need to pay self-employment tax or FICA tax on them.

The following sections go into the various tax responsibilities of your LLC at local, state, and federal levels in Oklahoma to help you ensure your LLC navigates them effectively.

Oklahoma Local Taxes

In Oklahoma, tax regulations can differ based on the municipality you're located in. Below, we have compiled a list of these local taxes that you may need to file for your LLC.

Local Sales and Use Taxes

In Oklahoma, local sales and use tax rates vary by city and county and are updated quarterly by the Oklahoma Tax Commission. You will compute the local sales and use tax by adding the state tax rate (4.5%) and the local tax rate applicable to the location of the sale or use. 

For example, an LLC in Oklahoma City that sells books online and ships them to customers within the state has a local sales and use tax rate of 4.125% plus the state tax rate, making the total sales and use tax rate 8.625%. Then, the collected sales and use tax is remitted to the Oklahoma Tax Commission.

Note: To determine if you need to pay sales and use tax for your LLC, check out the Oklahoma Tax Commission’s “Do I Need to Pay Sales Tax” guide.

General Property Tax 

Oklahoma’s property taxes are calculated based on the value of your property. On average, the effective tax rate for locally assessed property is about 1% of the property's value, making it one of the lowest rates in the country.

Property taxes are collected at a local level, and county officials are responsible for setting your tax rates, valuing your property, and collecting taxes. To correctly report property owned to your county assessor's office, you need to differentiate between real property (land and buildings) and personal property (fixtures, machinery, equipment, and other business assets). 

Note: Your property taxes are paid to the county, not the Oklahoma Tax Commission. The deadline to pay these taxes is December 31, and any payments made after this date will be considered delinquent.

Recommended Service: Schedule a free consultation with 1-800Accountant to ensure your business remains legally compliant.

Oklahoma State Taxes

Every state has its own regulations and rules that dictate how it taxes individuals and businesses. Below is a list of the most relevant state-level taxes for LLCs in Oklahoma.

Oklahoma Income Tax

The Oklahoma state income tax rate ranges between 0.25% and 4.75%, depending on your individual income level.

How and when you pay income tax depends on your LLC’s IRS tax classification. Members of an LLC taxed as a sole proprietorship, partnership, or S corporation must report their share of income on their personal tax returns and pay the applicable amount to the Oklahoma Tax Commission by April 15.

Oklahoma LLCs taxed as a C corporation are also required to pay corporate income tax, which has a current flat rate of 4%, on its gross taxable income. Returns must be filed on or before March 15, following the end of the taxable year.

Note: See the Oklahoma Tax Commission’s pages on individual and corporate taxes for a closer look at tax rates.

Franchise Tax

Oklahoma’s franchise tax applies to all for-profit businesses (both domestic and foreign) that are formed and maintained in the state. The franchise tax is based on the amount of capital invested or used in Oklahoma and is computed at the rate of $1.25 per $1,000 of capital. 

While LLCs are statutorily exempt from Oklahoma’s franchise tax, LLCs that are classified as C Corporations may still be subject to the state franchise tax. 

The franchise tax is separate from the corporate income tax and has different filing and payment requirements. 

• Max filer (corporations that pay the maximum amount of franchise tax of $20,000 per year) payments are due on May 1 each year. 
• Non-max filer payments are due on July 1.

Furthermore, if your corporation was founded in a state other than Oklahoma, you will need to pay an annual registered agent fee of $100 to the Oklahoma Secretary of State. This fee is collected when you file your franchise tax return to the Oklahoma Tax Commission. 

Note: For more details regarding the filing of your franchise and corporate income taxes, see Oklahoma’s Corporation Income and Franchise Tax Forms and Instructions packet. 

State Sales and Use Taxes

Oklahoma state sales tax is applied when you buy tangible goods or some types of services. As previously mentioned, the state sales tax rate is 4.5%, which has been in place since 1933. 

If you own an LLC that sells tangible personal property or provides taxable services in Oklahoma, you must obtain a Sales or Use Tax Permit, collect sales tax from your customers, and remit this tax to the Oklahoma Tax Commission.

On the other hand, use tax is charged on the use, storage, or consumption of physical items or services when you didn't pay sales tax on them at the time of purchase. Some of the items that are exempt from sales and use tax include prescription drugs, medical devices, and telecommunication services, among others. 

Note that the frequency of your Oklahoma sales tax filing depends on your sales volume and filing deadlines, which could be monthly, quarterly, or annually.

Withholding Tax

The state withholding tax is the amount of income tax that employers must deduct and withhold from their employees’ wages and remit to the Oklahoma Tax Commission. The withholding tax rate is based on the employee’s filing status, number of exemptions, and income level. 

LLCs must register as an employer with the Oklahoma Tax Commission and obtain a withholding tax account number to remit the withheld taxes to the state. Remittances must occur quarterly (if the amount withheld is less than $500 per quarter), monthly (if the amount withheld is between $500 and $5,000 per quarter), or semi-weekly ($10,000 or more withheld per month).

Note: To calculate the withholding amount, refer to the latest withholding tax tables and general information provided by the Oklahoma Tax Commission

Gross Production Tax

Oklahoma’s gross production tax is imposed on the production of oil and natural gas in the state. This tax is based on the gross value of the production, which is the total revenue earned from the first sale of the production.

The tax rate varies depending on the type, age, and location of the well, as well as the price of the product. This tax is collected by the first purchaser of the product, who must withhold the tax from the payment to the producer or operator of the lease. 

For example, if an oil company drills a well and sells the oil to a refinery, the refinery is the first purchaser of the product and must pay the tax and file monthly tax reports on the gross value of the production.

Motor Fuel Tax

Oklahoma’s motor fuel tax is a selective sales tax that applies to gasoline and diesel used for transportation purposes. The current rate of the tax is $0.19 cents per gallon for both gasoline and diesel, which is among the lowest in the nation. In addition, special fuels are taxed at $0.16 per gallon, and aviation gasoline and jet fuel are taxed at $0.0008 per gallon. 

The tax is collected by wholesale fuel vendors and paid to the Oklahoma Tax Commission. However, this tax does not apply to fuel used by governments, Indian tribes, and farm tractors, which are exempt or eligible for refunds. 

The motor fuel tax applies to LLCs in the same way as it applies to any other type of business entity that sells, imports, exports, or produces motor fuel in the state. 

Depending on the nature and scope of your activities, your LLC may need to obtain one or more licenses from the Oklahoma Tax Commission and file monthly reports and remit the tax due. For example, an LLC that operates as a supplier of motor fuel must obtain a license and report its sales and purchases of motor fuel to the Commission.

Note: For more information on the motor fuel tax, check out the Oklahoma Tax Commission’s rules and policies on motor fuel. 

Federal Taxes

Regardless of where your business is located, if you run an LLC in the US, there are a number of federal taxes you’ll need to pay. Below are some of the main types your LLC may be required to pay for federal tax purposes: 

Income Tax

By default, the Internal Revenue Service (IRS) will not treat single and multi-member LLCs as separate entities from you for tax purposes. What this means is that you’ll need to report your share of your LLC’s profits on your individual tax returns and pay income taxes on them at the personal rate of your tax bracket. 

Having said that, keep in mind that LLCs can also elect to be taxed as C corps or S corps, which changes how these taxes are levied in different ways.

Self-Employment Tax

In addition to federal income tax, members of single- and multi-member LLCs will need to pay federal self-employment taxes on the share of the business’s profits that they report on their personal tax return at the end of the year.

This tax is levied at a flat rate of 15.3% against businesses with net earnings that exceed $400, though it is applied slightly differently to LLCs that have elected to be taxed as S corps or C corps.

Employer Taxes

If your LLC hires any employees, it will need to withhold a portion of their salaries to cover various types of taxes on your employees’ behalf – including Social Security, Medicare (FICA), and payroll taxes.

Furthermore, the members of any LLCs that have elected to be taxed as an S corp will be required to pay employment taxes on their salaries. However, in return for this, the remainder of the business’s profit after these salaries have been distributed will be safe from both self-employment and FICA taxes. 

Excise Tax

If your LLC engages in certain types of business (such as the sale of alcohol and tobacco or operating a heavy highway vehicle, among others), it may need to pay federal excise taxes in order to do so legally. Each excise tax comes with its own set of rules, rates, and filing obligations you’ll need to be aware of.

Understanding and fulfilling these federal tax obligations is crucial for keeping your LLC compliant and avoiding unnecessary financial penalties and/or fines.

How to File LLC Taxes in Oklahoma

Below, we’ve outlined the general process an LLC in Oklahoma will need to follow in order to file their tax return correctly. Note that the specificities of each step will vary slightly depending on how your LLC is organized and the specific locality it’s based in.

Step 1: Gather Your Documentation

To ensure accurate tax filing, thorough record-keeping is essential. Begin by collecting your personal information, including:

• You and your partner’s Social Security number, date of birth, and residential address
• The previous year’s tax returns
• Your LLC’s Federal Tax Identification Number or Employer Identification Number (EIN)

Then, you’ll need to gather all documentation related to your business’s income, such as:

• Invoices you’ve issued
• Sales transaction logs
• Electronic payment reports from services like PayPal or Stripe

Lastly, assemble all records pertaining to your business expenses, which should cover:

• Lease receipts for your business premises
• Bills for utilities
• Records of office supplies purchases
• Documentation of business-related travel
• Payroll records for employees 

Note: Depending on how your LLC is organized and its tax election, you may need different information for your tax return.

Step 2: Find The Right Tax Forms

Once you've gathered all necessary documents, the next step is to select the correct tax forms for your LLC based on its organization:

• Single-Member LLCs: The business’s total income and expenses are reported on a Schedule C form, which is attached to the owner’s personal tax return and due by April 15 or the following business day if it lands on a weekend or holiday. 
• Multi-Member LLCs: File an information return using Form 1065. Members must fill out a Schedule K-1 showing their individual earnings or losses by March 15 or the next business day.
• C Corporations: File a corporate tax return using Form 1120 by the April 15 deadline or on the next business day if it's a weekend or holiday.
• S Corporations: Use Form 1120-S for the corporate tax return and distribute Schedule K-1 forms to shareholders for reporting their shares of profits or losses. The deadline for filing taxes using 1120-S is March 15 or the following business day.

Since state and local taxes will have their own individual forms and requirements, we recommend contacting your municipality or hiring an accountant for guidance.

With the appropriate documentation gathered and the correct tax forms for your business entity on hand, you’ll be ready to fill them out and submit them.

Step 3: File Your Taxes

The majority of businesses choose electronic filing for its speed, enhanced security, and reliability compared to paper filing, which can be slower and more prone to errors. Here’s how it works:

• Federal Tax Returns: The IRS provides two electronic services for tax submission: Free File for businesses with an AGI below $72,000 and Free Fillable Forms for those above the threshold.
• State Tax Returns: You can pay electronically or schedule payments through the Oklahoma Taxpayer Access Point (OK Tap) provided by the Oklahoma Tax Commission. 
• Local Tax Returns: As local tax filing procedures for property taxes may differ between municipalities, it's advisable to check with your county assessors for specific information. 

Note: These electronic filing tools are best suited for those who are already confident in handling their LLC taxes as if filling out a paper form.

For new business owners, we recommend opting for the expertise of a tax professional in order to ensure both accuracy and compliance in your tax filings. 

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

Keep Your Oklahoma LLC Compliant

While LLCs are generally easier to maintain than corporations, there are certain state and local formalities your LLC must satisfy in order to remain compliant. 

Oklahoma LLC Annual Certificate

Oklahoma does require LLCs to file an annual report, which is also known as an annual certificate. The annual certificate provides updated information about your LLC, such as owners, registered agents, addresses, business activities, and finances (as indicated on your Oklahoma LLC operating agreement). The purpose of the annual certificate is to keep the Secretary of State informed about your LLC operating in Oklahoma. 

The filing fee is $25 for both online and mail filings. Keep note that the due date of your annual certificate is the anniversary of your LLC’s establishment date. You can check your Articles of Organization for this date.

You should file your annual certificate on time to avoid any penalties or late fees. If you fail to file your annual certificate for two consecutive years, your LLC may be administratively dissolved by the state.

Licensure and Tax Requirements

In Oklahoma, almost all businesses are required to obtain various licenses and permits at the local, state, and federal levels. Below, we’ve broken down three of the most common types your LLC may need:

• Sales Tax Licenses: If your LLC sells a product or provides a taxable service in Oklahoma, you will need a Sales or Use Tax Permit from the Oklahoma Tax Commission. You can register for your sales tax permit online through the OTC Online Business Registration System, which is a part of the OK TAP web portal. 
• Professional Licenses: If your LLC provides a professional service that requires a state license, such as accounting, cosmetology, nursing, real estate, etc., you will need to obtain the license from the relevant licensing board or agency. You can find a list of common licensing requirements by industry on the Oklahoma Department of Commerce website.
• Environmental Permits: If your LLC engages in activities that may affect the environment, such as air emissions, water discharges, waste management, etc., you will need to obtain the appropriate environmental permit from the Oklahoma Department of Environmental Quality (DEQ). 

Note: To ensure that your LLC has obtained all the necessary statewide licenses and permits, check out the Licenses and Permits page on the official Oklahoma.gov website for a comprehensive list.

Oklahoma LLC Taxes FAQs