Oklahoma sales tax can vary depending on your business, location in the state, and other factors.
To start, Oklahoma has a state sales tax of 4.50%. However, counties or municipalities may also choose to add their own sales tax requirements to this number. As such, the maximum local sales tax rate in the state is 7%, while the combined average local and state sales tax comes to 8.98%.
Local jurisdictions can have a significant impact on the sales tax rate in Oklahoma. The lowest sales tax rate is in cities like Carrier and Bison, where the total sales tax comes to 4.85%.
However, cities like Owasso, Claremore, and several others have a significantly higher rate and sales tax can reach 10% for these municipal governments.
Oklahoma counties can also have a significant impact on the sales tax rate. Latimer County has the lowest sales tax at 8.75%. Although, several counties, including Tulsa County and Cleveland County, have the tax rate at 10%.
To be charged a sales tax in Oklahoma, a business should have a “nexus” in the state. The “nexus” essentially means a commercial connection to the state.
The nexus in Oklahoma can be in several forms. This includes a physical presence in the state through means like a business, office, warehouse, employees, representatives, etc.
An affiliate or business in Oklahoma that generates sales also qualifies for a nexus. Similarly, an entity having significant sales or business in Oklahoma also qualifies as a nexus.
Generally, the state considers annual sales of $100,000 and above as a threshold for paying sales tax. If a business has sales inside the state reaching this number, it automatically qualifies as a commercial nexus, and therefore must pay sales tax.
Oklahoma sales tax generally targets tangible goods and services are usually exempt. So, services and SaaS are usually tax exempt in the state. However, if the services a business provides result in manufacturing or creating a product from sale, the services may qualify for sales tax.
Similarly, certain tangible items might be exempt from sales tax in the state. These include some prescription medications, medical equipment, and supplies.