506: 2025 Form 506 Investment New Jobs Credit (2025)

Who files this form

Use Form 506 to claim Oklahoma’s Investment/New Jobs Credit with your Oklahoma income tax return. Individuals, partnerships, fiduciaries, corporations and S corporations may claim the credit, including individuals receiving a pass-through credit from a partnership or S corporation.

The credit covers qualifying manufacturing or web search portal activities in Oklahoma:

• New Jobs Credit: Based on an increase in qualified full-time employees. The form generally requires at least $7,000 in wages or salary subject to Oklahoma income tax withholding, with a special first-year rule for certain employees hired during the last three quarters.
• Investment Credit: Requires at least $50,000 invested in qualified depreciable property placed in service in Oklahoma in 2025. The credit is not allowed if the investment directly causes a decrease in employees.

Complete both calculations, but claim only the greater credit. Eligibility restrictions also apply, including restrictions involving certain other Oklahoma incentives.

What you'll need

Gather the information and supporting schedules that apply to your claim:

• Identification and business details: Name as shown on your return, business name, Social Security number, federal employer identification number, exact facility location and a full explanation of the manufacturing or other activity. A Manufacturing Sales/Exemption Permit (MSEP) is required for a manufacturing facility.
• New jobs schedule: Show the employee-count calculation for all columns. Include each employee’s name, Social Security number, brief job description, annual wages and the date the new job was created. The 2025 form uses 2024 as the base year.
• First-year wage exception affidavit, if applicable: State that the employee’s position will be retained the following tax year and will result in wages exceeding $7,000.
• Investment schedule: List each qualified property item, its cost and the date it was placed in service. Identify reductions for sales, transfers or disposals.
• Carryover schedule: Show all carryover credits claimed and used by tax year.
• Pass-through documentation, if applicable: Include documentation from the pass-through entity showing your share of the credit.
• Enterprise zone details, if applicable: Provide the facility’s county and 2020 Census Tract Number.

How to file

Provide Form 506 with your Oklahoma income tax return: Form 511, 511-NR, 512, 512-S, 513, 513-NR or 514. Include the supporting schedules required for your claim.

If you are claiming a pass-through credit from a partnership or S corporation, enter that entity’s name at the top of Form 506 and include documentation showing your share of the credit with your income tax return.

Use this form for each of the four remaining years in which the credit is claimed. Enter new employees hired in subsequent years on a new Form 506.

The supplied text does not give a mailing address or e-filing instructions.

Common mistakes

• Claiming both credits: Complete both calculations, but claim only the greater of the New Jobs Credit or Investment Credit. Keep that credit type for all remaining years on that particular Form 506.
• Counting an employee twice: Do not include an employee in Column 3 if a credit for that employee is being claimed on another Form 506. Also exclude increases resulting from investment in property for which an investment credit was claimed and allowed on another Form 506.
• Including ineligible positions: Administrative, legal, accounting, clerical, sales, delivery, housekeeping and yard-upkeep employees are generally not considered manufacturing support personnel and may not be included.
• Ignoring later changes: Continued credit depends on maintaining the new-employee level or retaining the qualified property. Reduce the investment for property sold, disposed of or transferred.
• Overlooking incentive restrictions: Quality Jobs or Quality Investment incentive payments may affect eligibility. The notices also prohibit claims involving specified pooled-finance withholding arrangements, certain bond-funded jobs or investments, and wind electric power generation.
• Failing to report transferred or allocated credits: These must be reported on OTC Form 569. The form warns that failure to file Form 569 will result in denial of the affected credits.

Questions people ask

How much is the New Jobs Credit?

The credit is $500 per qualifying new employee engaged in manufacturing, including support personnel, or in a web search portal establishment. For a facility in an enterprise zone, it is $1,000 per qualifying new employee.

How much is the Investment Credit?

The credit is 1% of qualified property cost after reductions for sales, transfers or disposals. The rate is 2% for a facility in an enterprise zone. The qualifying investment must be at least $50,000.

Can I count a new employee who earned less than $7,000 in the first year?

For Column 1 in the first year of a jobs-based claim, the form allows an exception if the employee was hired in one of the last three quarters, has wages or salary that will produce annual paid wages above $7,000, and you submit an affidavit stating that the position will be retained the following tax year and result in wages above $7,000.

Can I carry unused credit forward?

Yes. Unused credit may be carried forward, in order, through the four years following the qualification year and then through the 15 years following the initial five-year period. Unused credit from qualified depreciable property may also be used after the initial 20-year period. Provide a schedule showing carryover credits claimed and used by tax year.

Where can I check whether my facility is in an enterprise zone?

The form points to the Oklahoma Department of Commerce’s current listing. For more information, contact its Research Division at 1.800.879.6552 or lesli.crofford@okcommerce.gov.

Official sources

• https://oklahoma.gov/content/dam/ok/en/tax/documents/forms/tax-credits/506.pdf