Is Equipment Rental Taxable in Oklahoma?

Taxation of Leases and Rentals in Oklahoma

• Leases over 12 months are exempt from sales tax if owner paid motor vehicle excise tax.
• Rentals under 90 days are subject to sales tax, rental tax, and tourism tax.
• Sales of tangible media property are subject to sales tax.

Taxability of Rental Income in Oklahoma

• Rentals are taxable regardless of length.
• If you collect payment for short-term rentals, you likely must collect and remit taxes.

Exemptions and Taxable Purchases

• Exempt purchases become taxable if first used for nonexempt purposes.
• For example, a rental company buys a tractor tax exempt. If it later uses the tractor itself, it owes tax on the tractor’s value.

Overview of Taxes in Oklahoma

• Oklahoma doesn’t tax Social Security and has a lower than average income tax rate.
• Median property taxes are below national average.
• Groceries are taxed.

Calculating Oklahoma State Tax

• The first step is to determine your taxable income, which includes all income sources.
• Average tax rate is 11.67% and marginal tax rate is 22%.

Property Tax in Oklahoma

• Property tax rates are based on the taxable value of your property and your county’s tax rate.

Procedures for Rental Property Taxes

• Rental of tangible property not conducted as a business is reported on Schedule 1.
• List farm equipment with the County Assessor to receive a tax exemption permit.

Sales Tax Exemptions

• Leases over 12 months are exempt from sales tax if owner paid motor vehicle excise tax.
• Rentals under 90 days are subject to sales tax, rental tax, and tourism tax.