- Inventor Royalty Income: Income earned by an inventor from a product developed and manufactured in this state shall be exempt from income tax for a period of seven years from January 1 of the first year in which such royalty is received as long as the manufacturer remains in this state. To support your deduction please furnish the following:
- A copy of the patent
- A copy of the royalty agreement with the manufacturer
- A copy of registration form from OCAST.
- Manufacturer Exclusion: An instate manufacturer of a product developed in Oklahoma by an inventor may exclude 65% of the cost of depreciable property (i.e. machinery, fixtures, equipment, buildings, or substantial improvements to buildings) purchased and used directly in manufacturing the product. The maximum exclusion you can claim is $500,000. Any amount that you can't claim in the year you purchased the property may be carried forward for four years.
- Historic Battle Sites: There shall be a deduction, limited to 50% of the capital gain, if you sell to the State of Oklahoma any real property which was the site of a historic battle during the nineteenth century and has been designated a National Historic Landmark.
- Small Business Incubator Exclusion: Income earned by the sponsor from rental fees, service fees or any other form of payment for services provided to a tenant as an operator or an incubator, or for providing funding for such a facility, is exempt from state income tax for ten years from the date of the tenant's occupancy in an incubator. Income earned by the tenant as a result of activities conducted as an occupant in an incubator, including income distributed to partners or shareholders, is exempt from state income tax for ten years from the date of the tenant's occupancy.
- Military Member Pay Exclusion: Any payment made by the United States Department of Defense as a result of the death of a member of the Armed Forces who has been killed in action in a designated combat zone shall be exempt from Oklahoma income tax during the taxable year in which the individual is declared deceased by the Armed Forces.
- Military Spouse Pay Exclusion: Any income earned by the spouse of a member of the Armed Forces of the United States who has been killed in action in a designated combat zone shall be exempt from Oklahoma income tax during the taxable year in which the individual is declared deceased by the Armed Forces.
- Other Subtractions: Enter any allowable Oklahoma deductions from Federal Adjusted Gross Income to arrive at Oklahoma Adjusted Gross Income that were not previously claimed under this heading "Miscellaneous: Other Subtractions." Specify type of subtraction and Oklahoma Statute authorizing the subtraction. Enclose a detailed explanation and verifying documents.
NOTE: If you are claiming a subtraction that requires further documentation be sure to include it with your return if you are mailing the return. If you are e-filing, any supporting documentation should be retained with your records in case the Oklahoma Tax Commission should ask for it.