Okla. Stat. tit. 68, § 68-2902v2

tax.

A. Except as otherwise provided by subsection H of Section 3658

of this title pursuant to which the exemption authorized by this

section may not be claimed, a qualifying manufacturing concern, as

defined by Section 6B of Article X of the Oklahoma Constitution, and

as further defined herein, shall be exempt from the levy of any ad

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1260

valorem taxes upon new, expanded or acquired manufacturing

facilities including facilities engaged in research and development,

for a period of five (5) years. The provisions of Section 6B of

Article X of the Oklahoma Constitution requiring an existing

facility to have been unoccupied for a period of twelve (12) months

prior to acquisition shall be construed as a qualification for a

facility to initially receive an exemption, and shall not be deemed

to be a qualification for that facility to continue to receive an

exemption in each of the four (4) years following the initial year

for which the exemption was granted. Such facilities are hereby

classified for the purposes of taxation as provided in Section 22 of

Article X of the Oklahoma Constitution.

B. For purposes of this section, the following definitions

shall apply:

1. “Manufacturing facilities” means facilities engaged in the

mechanical or chemical transformation of materials or substances

into new products and except as provided by paragraph 6 of

subsection C of this section shall include:

a. establishments which have received a manufacturer

exemption permit pursuant to the provisions of Section

1359.2 of this title,

b. facilities including repair and replacement parts,

primarily engaged in aircraft repair, building and

rebuilding whether or not on a factory basis,

c. establishments primarily engaged in computer services

and data processing as defined under Industrial Group

Numbers 5112 and 5415, and U.S. Industry Number 334611

and 519130 of the NAICS Manual, latest revision, and

which derive at least fifty percent (50%) of their

annual gross revenues from the sale of a product or

service to an out-of-state buyer or consumer, and as

defined under Industrial Group Number 5182 of the

NAICS Manual, latest revision, which derive at least

eighty percent (80%) of their annual gross revenues

from the sale of a product or service to an out-of-

state buyer or consumer. Eligibility as a

manufacturing facility pursuant to this subparagraph

shall be established, subject to review by the

Oklahoma Tax Commission, by annually filing an

affidavit with the Tax Commission stating that the

facility so qualifies and such other information as

required by the Tax Commission. For purposes of

determining whether annual gross revenues are derived

from sales to out-of-state buyers, all sales to the

federal government shall be considered to be an out-

of-state buyer,

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1261

d. facilities that the investment cost of the

construction, acquisition or expansion is Five Hundred

Thousand Dollars ($500,000.00) or more with respect to

assets placed into service during calendar year 2022.

For subsequent calendar years, the investment required

shall be increased annually by a percentage equal to

the previous year’s increase in the Consumer Price

Index-All Urban Consumers (“CPI-U”) and such adjusted

amount shall be the required investment cost in order

to qualify for the exemption authorized by this

section. The Oklahoma Department of Commerce shall

determine the amount of the increase, if any, on

January 1 of each year. The Oklahoma Tax Commission

shall publish on its website at least annually the

adjusted dollar amount in order to qualify for the

exemption authorized by this section and shall include

the adjusted dollar amount in any of its relevant

forms or publications with respect to the exemption.

Provided, “investment cost” shall not include the cost
f the increase, if any, on

January 1 of each year. The Oklahoma Tax Commission

shall publish on its website at least annually the

adjusted dollar amount in order to qualify for the

exemption authorized by this section and shall include

the adjusted dollar amount in any of its relevant

forms or publications with respect to the exemption.

Provided, “investment cost” shall not include the cost

of direct replacement, refurbishment, repair or

maintenance of existing machinery or equipment, except

that investment cost shall include capital

expenditures for direct replacement, refurbishment,

repair or maintenance of existing machinery or

equipment that qualifies for depreciation and/or

amortization pursuant to the Internal Revenue Code of

1986, as amended, and such expenditures shall be

eligible as a part of an expansion that otherwise

qualifies under this section,

e. establishments primarily engaged in distribution as

defined under Industry Numbers 49311, 49312, 49313 and

49319 and Industry Sector Number 42 of the NAICS

Manual, latest revision, and which meet the following

qualifications:

(1) construction with an initial capital investment

of at least Five Million Dollars ($5,000,000.00),

(2) employment of at least one hundred (100) full-

time-equivalent employees, as certified by the

Oklahoma Employment Security Commission,

(3) payment of wages or salaries to its employees at

a wage which equals or exceeds the average wage

requirements in the Oklahoma Quality Jobs Program

Act for the year in which the real property was

placed into service, and

(4) commencement of construction on or after November

1, 2007, with construction to be completed within

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1262

three (3) years from the date of the commencement

of construction,

f. facilities engaged in the manufacturing, compounding,

processing or fabrication of materials into articles

of tangible personal property according to the special

order of a customer (custom order manufacturing) by

manufacturers classified as operating in North

American Industry Classification System (NAICS)

Sectors 32 and 33, but does not include such custom

order manufacturing by manufacturers classified in

other NAICS code sectors, and

g. with respect to any entity making an application for

the exemption authorized by this section on or after

January 1, 2023, the establishment making application

for exempt treatment of real or personal property

acquired or improved beginning January 1, 2022, and

for any calendar year thereafter, the entity shall be

required to pay new direct jobs, as defined by Section

3603 of this title for purposes of the Oklahoma

Quality Jobs Program Act, an average annualized wage

which equals or exceeds the average wage requirement

in the Oklahoma Quality Jobs Program Act for the year

in which the real or personal property was placed into

service. The Oklahoma Tax Commission may request

verification from the Oklahoma Department of Commerce

that an establishment seeking an exemption for real or

personal property pays an average annualized wage that

equals or exceeds the average wage requirement in

effect for the year in which the real or personal

property was placed into service. For purposes of

this subparagraph, it shall not be necessary for the

establishment to qualify for incentive payments

pursuant to the Oklahoma Quality Jobs Program Act, but

the establishment shall be subject to the wage

requirements of the Oklahoma Quality Jobs Program Act

with respect to new direct jobs in order to qualify

for the exempt treatment authorized by this section.

Eligibility as a manufacturing facility pursuant to this

subparagraph shall be established, subject to review by the Tax

Commission, by annually filing an affidavit with the Tax Commission

stating that the facility so qualifies and containing such other

information as required by the Tax Commission.
t to new direct jobs in order to qualify

for the exempt treatment authorized by this section.

Eligibility as a manufacturing facility pursuant to this

subparagraph shall be established, subject to review by the Tax

Commission, by annually filing an affidavit with the Tax Commission

stating that the facility so qualifies and containing such other

information as required by the Tax Commission.

Provided, eating and drinking places, as well as other retail

establishments, shall not qualify as manufacturing facilities for

purposes of this section, nor shall centrally assessed properties.

Eligibility as a manufacturing facility pursuant to this

subparagraph shall be established, subject to review by the Tax

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1263

Commission, by annually filing an application with the Tax

Commission stating that the facility so qualifies and containing

such other information as required by the Tax Commission;

2. “Facility” and “facilities”, except as otherwise provided by

this section, means and includes the land, buildings, structures and

improvements used directly and exclusively in the manufacturing

process. Effective January 1, 2022, and for each calendar year

thereafter, for establishments which have received a manufacturer

exemption permit pursuant to the provisions of Section 1359.2 of

this title, or facilities engaged in manufacturing activities

defined or classified in the NAICS Manual under Industry Nos. 311111

through 339999, inclusive, but for no other establishments, facility

and facilities means and includes the land, buildings, structures,

improvements, machinery, fixtures, equipment and other personal

property used directly and exclusively in the manufacturing process;

and

3. “Research and development” means activities directly related

to and conducted for the purpose of discovering, enhancing,

increasing or improving future or existing products or processes or

productivity.

C. The following provisions shall apply:

1. A manufacturing concern shall be entitled to the exemption

herein provided for each new manufacturing facility constructed,

each existing manufacturing facility acquired and the expansion of

existing manufacturing facilities on the same site, as such terms

are defined by Section 6B of Article X of the Oklahoma Constitution

and by this section;

2. No manufacturing concern shall receive more than one five-

year exemption for any one manufacturing facility unless the

expansion which qualifies the manufacturing facility for an

additional five-year exemption meets the requirements of paragraph 4

of this subsection and the employment level established for any

previous exemption is maintained;

3. Any exemption as to the expansion of an existing

manufacturing facility shall be limited to the increase in ad

valorem taxes directly attributable to the expansion;

4. All initial applications for any exemption for a new,

acquired or expanded manufacturing facility shall be granted only

if:

a. there is a net increase in annualized base payroll

over the initial payroll of at least Two Hundred Fifty

Thousand Dollars ($250,000.00) if the facility is

located in a county with a population of fewer than

seventy-five thousand (75,000), according to the most

recent Federal Decennial Census, while maintaining or

increasing base payroll in subsequent years, or at

least One Million Dollars ($1,000,000.00) if the

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1264

facility is located in a county with a population of

seventy-five thousand (75,000) or more, according to

the most recent Federal Decennial Census, while

maintaining or increasing base payroll in subsequent

years; provided, the payroll requirement of this

subparagraph shall be waived for claims for exemptions

including claims previously denied or on appeal on

March 3, 2010, for all initial applications for
ted in a county with a population of

seventy-five thousand (75,000) or more, according to

the most recent Federal Decennial Census, while

maintaining or increasing base payroll in subsequent

years; provided, the payroll requirement of this

subparagraph shall be waived for claims for exemptions

including claims previously denied or on appeal on

March 3, 2010, for all initial applications for

exemption filed on or after January 1, 2004, and on or

before March 31, 2009, and all subsequent annual

exemption applications filed related to the initial

application for exemption, for an applicant, if the

facility has been located in Oklahoma for at least

fifteen (15) years engaged in marine engine

manufacturing as defined under U.S. Industry Number

333618 of the NAICS Manual, latest revision, and has

maintained an average employment of five hundred (500)

or more full-time-equivalent employees over a ten-year

period. Any applicant that qualifies for the payroll

requirement waiver as outlined in the previous

sentence and subsequently closes its Oklahoma

manufacturing plant prior to January 1, 2012, may be

disqualified for exemption and subject to recapture.

For an applicant engaged in paperboard manufacturing

as defined under U.S. Industry Number 322130 of the

NAICS Manual, latest revision, union master payouts

paid by the buyer of the facility to specified

individuals employed by the facility at the time of

purchase, as specified under the purchase agreement,

shall be excluded from payroll for purposes of this

section.

In order to provide certainty with respect to

investments in manufacturing facilities pertaining to

all initial applications for exemption filed on or

after January 1, 2016, the following definitions shall

apply:

(1) “base payroll” shall mean total payroll adjusted

for any nonrecurring bonuses, exercise of stock

option or stock rights and other nonrecurring,

extraordinary items included in total payroll,

and

(2) “initial payroll” shall mean base payroll for the

year immediately preceding the initial

construction, acquisition or expansion.

The Tax Commission shall verify payroll

information through the Oklahoma Employment

Security Commission by using reports from the

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1265

Oklahoma Employment Security Commission for the

calendar year immediately preceding the year for

which initial application is made for base-line

payroll, which must be maintained or increased

for each subsequent year; provided, a

manufacturing facility shall have the option of

excluding from its payroll, for purposes of this

section:

i. payments to sole proprietors, members

of a partnership, members of a limited

liability company who own at least ten

percent (10%) of the capital of the

limited liability company or

stockholder-employees of a corporation

who own at least ten percent (10%) of

the stock in the corporation, and

ii. any nonrecurring bonuses, exercise of

stock option or stock rights or other

nonrecurring, extraordinary items

included in total payroll numbers as

reported by the Oklahoma Employment

Security Commission. A manufacturing

facility electing either option shall

indicate such election upon its

application for an exemption under this

section. Any manufacturing facility

electing either option shall submit

such information as the Tax Commission

may require in order to verify payroll

information. Payroll information

submitted pursuant to the provisions of

this paragraph shall be submitted to

the Tax Commission and shall be subject

to the provisions of Section 205 of

this title, and

b. the facility offers, or will offer within one hundred

eighty (180) days of the date of employment, a basic

health benefits plan to the full-time-equivalent

employees of the facility, which is determined by the

Oklahoma Department of Commerce to consist of the

elements specified in subparagraph b of paragraph 1 of
n and shall be subject

to the provisions of Section 205 of

this title, and

b. the facility offers, or will offer within one hundred

eighty (180) days of the date of employment, a basic

health benefits plan to the full-time-equivalent

employees of the facility, which is determined by the

Oklahoma Department of Commerce to consist of the

elements specified in subparagraph b of paragraph 1 of

subsection A of Section 3603 of this title or elements

substantially equivalent thereto.

For purposes of this section, calculation of the amount of

increased base payroll shall be measured from the start of initial

construction or expansion to the completion of such construction or

expansion or for three (3) years from the start of initial

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1266

construction or expansion, whichever occurs first. The amount of

increased base payroll shall include payroll for full-time-

equivalent employees in this state who are employed by an entity

other than the facility which has previously or is currently

qualified to receive an exemption pursuant to the provisions of this

section and who are leased or otherwise provided to the facility, if

such employment did not exist in this state prior to the start of

initial construction or expansion of the facility. The

manufacturing concern shall submit an affidavit to the Tax

Commission, signed by an officer, stating that the construction,

acquisition or expansion of the facility will result in a net

increase in the annualized base payroll as required by this

paragraph and that full-time-equivalent employees of the facility

are or will be offered a basic health benefits plan as required by

this paragraph. If, after the completion of such construction or

expansion or after three (3) years from the start of initial

construction or expansion, whichever occurs first, the construction,

acquisition or expansion has not resulted in a net increase in the

amount of annualized base payroll, if required, or any other

qualification specified in this paragraph has not been met, the

manufacturing concern shall pay an amount equal to the amount of any

exemption granted including penalties and interest thereon, to the

Tax Commission for deposit to the Ad Valorem Reimbursement Fund;

5. Except as otherwise provided by this paragraph, any new,

acquired or expanded computer data processing, data preparation or

information processing services provider classified in U.S. Industry

Number 518210 of the North American Industrial Classification System

(NAICS) Manual, 2017 revision, may apply for exemptions under this

section for each year in which new, acquired, or expanded capital

improvements to the facility are made for assets placed in service

not later than December 31, 2021, if:

a. there is a net increase in annualized payroll of the

applicant at any facility or facilities of the

applicant in this state of at least Two Hundred Fifty

Thousand Dollars ($250,000.00), which is attributable

to the capital improvements, or a net increase of

Seven Million Dollars ($7,000,000.00) or more in

capital improvements, while maintaining or increasing

payroll at the facility or facilities in this state

which are included in the application, and

b. the facility offers, or will offer within one hundred

eighty (180) days of the date of employment of new

employees attributable to the capital improvements, a

basic health benefits plan to the full-time-equivalent

employees of the facility, which is determined by the

Oklahoma Department of Commerce to consist of the

elements specified in subparagraph b of paragraph 1 of

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1267

subsection A of Section 3603 of this title or elements

substantially equivalent thereto.

An establishment described by this paragraph, the primary

business activity of which is described by Industry No. 518210 of
ermined by the

Oklahoma Department of Commerce to consist of the

elements specified in subparagraph b of paragraph 1 of

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1267

subsection A of Section 3603 of this title or elements

substantially equivalent thereto.

An establishment described by this paragraph, the primary

business activity of which is described by Industry No. 518210 of

the North American Industry Classification System (NAICS) Manual,

2017 revision, that has applied for and been granted an exemption

for personal property at any time within five (5) years prior to

November 1, 2021, may apply for exemptions for items of eligible

personal property to be located within improvements to real property

and such real property and improvements having been exempt from ad

valorem taxation prior to November 1, 2021, pursuant to the

provisions of this section if such personal property is placed in

service not later than December 31, 2036. No additional personal

property of such establishment placed in service after such date

shall qualify for the exempt treatment otherwise authorized pursuant

to this paragraph;

6. Effective January 1, 2017, an entity engaged in electric

power generation by means of wind, as described by the North

American Industry Classification System, No. 221119, shall not be

defined as a qualifying manufacturing concern for purposes of the

exemption otherwise authorized pursuant to Section 6B of Article X

of the Oklahoma Constitution or qualify as a manufacturing facility

as defined in this section. No initial application for exemption

shall be filed by or accepted from an entity engaged in electric

power generation by means of wind on or after January 1, 2018;

7. An entity or applicant engaged in an industry as defined

under U.S. Industry Number 324110 of the NAICS Manual, latest

revision, which has applied for or been granted an exemption for a

time period which began on or after calendar year 2012 and before

calendar year 2016 but which did not meet the payroll requirements

of subparagraph a of paragraph 4 of this subsection because of

nonrecurring bonuses, exercise of stock option or stock rights or

other nonrecurring, extraordinary items included in total payroll in

the previous year, shall be allowed an exemption, beginning with

calendar year 2016, for the number of years including the calendar

year for which the exemption was denied, remaining in the entity’s

five-year exemption period, provided such entity attains or

increases payroll at or above the initial or base payroll

established for the exemption;

8. A facility engaged in manufacturing defined under U.S.

Industry Number 327310 of the NAICS Manual shall have the payroll

requirements of paragraph 4 of this subsection waived for tax year

2021, which is based in part on the 2020 calendar year payroll

reported to the Oklahoma Employment Security Commission, and may

continue to receive the exemption for the five-year period provided

in this section only if all other requirements of this section are

met; and

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1268

9. A facility engaged in manufacturing which otherwise

qualifies for the exemption or exemptions pursuant to the provisions

of this section shall have the payroll requirements of paragraph 4

of this subsection waived for tax year 2021, which is based in part

on the 2020 calendar year payroll reported to the Oklahoma

Employment Security Commission, and for tax year 2022, which is

based in part on the 2021 calendar year payroll reported to the

Oklahoma Employment Security Commission, and may continue to receive

the exemption for the five-year period provided in this section only

if all other requirements of this section are met. Provided, a

facility engaged in manufacturing as defined under Industrial Group

Number 3364 of the NAICS Manual, latest revision, which otherwise
ed in part on the 2021 calendar year payroll reported to the

Oklahoma Employment Security Commission, and may continue to receive

the exemption for the five-year period provided in this section only

if all other requirements of this section are met. Provided, a

facility engaged in manufacturing as defined under Industrial Group

Number 3364 of the NAICS Manual, latest revision, which otherwise

qualifies or qualified to receive the exemption for the five-year

period provided in this section, including claims previously denied,

shall have the payroll requirements of paragraph 4 of this

subsection waived for the five-year exemption period of those

initial exemption applications filed after January 1, 2020, and

before March 16, 2021.

D. 1. Except as provided in paragraph 2 of this subsection,

the five-year period of exemption from ad valorem taxes for any

qualifying manufacturing facility property shall begin on January 1

following the initial qualifying use of the property in the

manufacturing process.

2. The five-year period of exemption from ad valorem taxes for

any qualifying manufacturing facility, as specified in subparagraphs

a and b of this paragraph, which is located within a tax incentive

district created pursuant to the Local Development Act by a county

having a population of at least five hundred thousand (500,000),

according to the most recent Federal Decennial Census, shall begin

on January 1 following the expiration or termination of the ad

valorem exemption, abatement, or other incentive provided through

the tax incentive district. Facilities qualifying pursuant to this

subsection shall include:

a. a manufacturing facility as defined in subparagraph c

of paragraph 1 of subsection B of this section, and

b. an establishment primarily engaged in distribution as

defined under Industry Number 49311 of the North

American Industry Classification System for which the

initial capital investment was at least One Hundred

Eighty Million Dollars ($180,000,000.00); provided,

that the qualifying job creation and depreciable

property investment occurred prior to calendar year

2017 but not earlier than calendar year 2013.

E. Any person, firm or corporation claiming the exemption

herein provided for shall file each year for which exemption is

claimed, an application therefor with the county assessor of the

county in which the new, expanded or acquired facility is located.

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1269

The application shall be on a form or forms prescribed by the Tax

Commission, and shall be filed on or before March 15, except as

provided in Section 2902.1 of this title, of each year in which the

facility desires to take the exemption or within thirty (30) days

from and after receipt by such person, firm or corporation of notice

of valuation increase, whichever is later. In a case where

completion of the facility or facilities will occur after January 1

of a given year, a facility may apply to claim the ad valorem tax

exemption for that year. If such facility is found to be qualified

for exemption, the ad valorem tax exemption provided for herein

shall be granted for that entire year and shall apply to the ad

valorem valuation as of January 1 of that given year. For

applicants who qualify under the provisions of subparagraph b of

paragraph 1 of subsection B of this section, the application shall

include a copy of the affidavit and any other information required

to be filed with the Tax Commission.

F. The application shall be examined by the county assessor and

approved or rejected in the same manner as provided by law for

approval or rejection of claims for homestead exemptions. The

taxpayer shall have the same right of review by and appeal from the

county board of equalization, in the same manner and subject to the

same requirements as provided by law for review and appeals
mmission.

F. The application shall be examined by the county assessor and

approved or rejected in the same manner as provided by law for

approval or rejection of claims for homestead exemptions. The

taxpayer shall have the same right of review by and appeal from the

county board of equalization, in the same manner and subject to the

same requirements as provided by law for review and appeals

concerning homestead exemption claims. Approved applications shall

be filed by the county assessor with the Tax Commission no later

than June 15, except as provided in Section 2902.1 of this title, of

the year in which the facility desires to take the exemption.

Incomplete applications and applications filed after June 15 will be

declared null and void by the Tax Commission. In the event that a

taxpayer qualified to receive an exemption pursuant to the

provisions of this section shall make payment of ad valorem taxes in

excess of the amount due, the county treasurer shall have the

authority to credit the taxpayer’s real or personal property tax

overpayment against current taxes due. The county treasurer may

establish a schedule of up to five (5) years of credit to resolve

the overpayment.

G. Nothing herein shall in any manner affect, alter or impair

any law relating to the assessment of property, and all property,

real or personal, which may be entitled to exemption hereunder shall

be valued and assessed as is other like property and as provided by

law. The valuation and assessment of property for which an

exemption is granted hereunder shall be performed by the Tax

Commission using one or more of the cost, income and expense and

sales comparison approaches to estimate fair cash value in

accordance with the Uniform Standards of Professional Appraisal

Practice.

Oklahoma Statutes - Title 68. Revenue and Taxation Page 1270

H. The Tax Commission shall have the authority and duty to

prescribe forms and to promulgate rules as may be necessary to carry

out and administer the terms and provisions of this section.