OK
Does Oklahoma tax tips and overtime?
The federal deduction and the Oklahoma deduction are separate questions. Here is where Oklahoma actually lands, and why.
How Oklahoma builds its tax base
Oklahoma starts from your federal adjusted gross income. Both deductions are below-the-line — they reduce federal taxable income but leave AGI untouched — so neither reaches this state's return automatically. Anything you get here had to be legislated separately.
Tips in Oklahoma
Still taxedOklahoma Form 511 line 1 is 'Federal adjusted gross income (from Federal 1040 or 1040-SR)', so the below-the-line IRC 224 deduction never enters Oklahoma's starting number; Oklahoma then applies its OWN standard deduction ($6,350/$12,700/$9,350) or Schedule 511-D itemized deductions, which 'begin with federal itemized deductions from your Federal Schedule A' — and Sec. 224 is not a Schedule A item. The 2025 Form 511 packet contains zero references to tips, gratuities, H.R. 1, or IRC 224/225, and Schedule 511-A (Oklahoma Subtractions) has no tip line. No conforming legislation appears in the Oklahoma Tax Commission's 2025 or 2026 Legislative Updates.
Source: Oklahoma Tax Commission, 2025 Oklahoma Resident Individual Income Tax Forms and Instructions (Form 511 Packet) — Form 511 line 1, Schedule 511-A, Schedule 511-D instructions · last reviewed
Overtime in Oklahoma
Still taxedIdentical mechanism to tips: IRC 225 is below-the-line and does not reduce federal AGI, which is Oklahoma's Form 511 line 1 starting point. No overtime subtraction exists on Schedule 511-A and no overtime deduction appears anywhere in the 2025 Form 511 packet. The Oklahoma Tax Commission Tax Policy Division's 2026 Legislative Update (and the 2025 edition) contain no mention of overtime, tips, H.R. 1/P.L. 119-21, or IRC conformity changes — 2025-26 Oklahoma income tax legislation (e.g. HB 2764) addressed rate and bracket cuts only. NOTE: some low-quality online trackers wrongly assert Oklahoma is a rolling-conformity state that picks these up automatically; that is inconsistent with Form 511's federal-AGI starting point.
Source: Oklahoma Tax Commission Tax Policy Division, 2026 Tax Legislation Summary (Legislative Update), read together with the 2025 Form 511 Packet · last reviewed
Whatever your state does, your payroll taxes do not change
Both deductions reduce income tax only. Social Security and Medicare are still charged on the same wages, in every state.