Oklahoma's 2025: Historic Tort Reform and Economic Gains Tempered by Regulatory Inconsistency
When states combine low costs of doing business with strategic economic development policy, the results can be transformative. Oklahoma's 2025 demonstrates exactly this principle – and then some. The state ranked #1 in America for lowest cost of doing business, secured a $4 billion corporate investment thanks to the Reindustrialize Oklahoma Act, passed comprehensive tort reform, and achieved its most successful month of economic development in state history with 2,907 announced jobs in just three weeks. These are genuine wins for Oklahoma to compete for major investment and manufacturing.
Yet even as these victories accumulate, Oklahoma lawmakers have advanced policies that create reporting burdens on major manufacturers, impose regulatory hurdles through legislative approval requirements, and restrict pharmaceutical benefit managers in ways that will drive up drug prices for consumers. As Oklahoma looks back at 2025, it's clear that the state has found winning formula in low costs and strategic incentives but must maintain consistency on regulatory policy to capitalize fully on the momentum.
The Wins: Oklahoma's Emergence as a Low-Cost, Business-Friendly Destination
Oklahoma has quietly positioned itself as one of America's most competitive states for doing business. In 2025, that strategy delivered historic results—from national cost-of-doing-business rankings to transformational corporate investments.
#1 in the Nation for Cost of Doing Business
According to CNBC's 2025 rankings, Oklahoma reached #1 in the nation for its low cost of doing business. This achievement reflects Oklahoma's strategic combination of tax incentives, credits, exemptions, and stable tax policies that help businesses reduce their tax burdens, grow, and compete effectively.
The distinction of having the lowest cost of doing business in America is formidable and will attract the attention of businesses across the U.S. Lower operating costs free up capital for businesses to reinvest in equipment, innovation, and hiring, which accelerates growth and improves long-term profitability.
This isn't theoretical. This news reflects real structural advantages that compound over time. When businesses face lower energy costs, lower tax burdens, and lower operating expenses, they can compete more effectively against national and global competitors while still maintaining healthy profit margins.
The COMPETE Act and OkEDGE: Institutional Investment in Economic Development
In support of business recruitment and growth, the OK Department of Commerce created the Oklahoma Office of Economic Development, Growth and Expansion (OkEDGE), dedicated to business recruitment, retention, and expansion.
OkEDGE coordinates statewide economic development efforts and serves as the principal point of contact for businesses considering major investments in the state. This represents Oklahoma getting serious about attracting businesses by expanding resources toward recruiting and growing companies within the state.
The early results validate the investment. In May 2025, the Oklahoma Department of Commerce announced 266 applications and 201 project approvals for the Oklahoma Innovation Expansion Program (OIEP). These projects, primarily with companies already existing in Oklahoma, are expected to create nearly 1,000 jobs and generate $52 million in new payroll over the next 12 months.
Even more impressively, in May 2025, the Oklahoma Department of Commerce announced the most successful month of economic development in state history, based on publicly announced job growth. From April 24 to May 15, companies expanding or launching operations in Oklahoma announced plans to create 2,907 jobs. That's extraordinary momentum: nearly 3,000 jobs announced in a single 21-day period.
The Reindustrialize Oklahoma Act: Attracting Major Manufacturing
The Reindustrialize Oklahoma Act (HB 2781, ROA-25) is an investment rebate program designed to incentivize very large manufacturing investments. It brings performance-based rebates for any manufacturer that invest at least $2 billion and create 700 new jobs in the first year and 1,000 jobs in later years. Eligibility in the program runs through 2045.
The Act was developed to help reshore critical industries such as aluminum, boosting job creation and strengthening America's supply chains. The strategy is working. In May 2025, the UAE-based Emirates Global Aluminum chose Inola, Oklahoma, as the preferred site for a $4 billion primary aluminum production plant—a deal that directly credits the Reindustrialize Oklahoma Act. This deal is expected to generate approximately 1,000 direct jobs and 1,800 indirect jobs with average wages above $80,000. The project will also double U.S. domestic aluminum production capacity.
This is what winning economic development looks like. When states combine low costs of doing business with strategic incentives tailored to emerging priorities (like reshoring critical manufacturing), they attract transformational investment. The Emirates Global Aluminum commitment will ripple through Oklahoma's economy for decades, creating high-wage jobs, supporting supply chains, and strengthening critical American manufacturing capacity.
Comprehensive Tort Reform: Fixing a Broken Legal System
Traditionally, Oklahoma's legal climate has been among the worst in the nation for businesses. High tort litigation costs have been damaging Oklahoma's economy and business growth, with the state losing billions of dollars annually due to unchecked legal fees, non-transparent legal actions, and excessive damage awards.
The economic impact has been staggering. From 2020 to 2023, excess tort costs resulted in Oklahoma losing $14.9 billion in gross product and 128,500 job years as companies targeted by lawsuits had to lay off or reduce hours to pay damages and legal fees. Historically, excess tort costs set Oklahoma's gross product back $3.7 billion each year and cost almost 32,000 jobs annually.
Finally, in 2025, a package of tort-reform bills began addressing this crisis:
SB 453: Capped non-economic damages in civil cases, reducing costly and unpredictable "nuclear verdicts" that could cripple or bankrupt businesses and lower liability risk for companies operating in Oklahoma.
SB 625: Took aim at third-party litigation funding by increasing transparency about who finances lawsuits, making speculative litigations less attractive.
SB 642: Strengthened freedom-of-contract protections and limited legal liability for contractors, improving the state's legal climate for larger corporate defendants and contractors.
These bills should help attract more major businesses to Oklahoma while helping to mitigate damage already done to Oklahoma's businesses and economy through major tort litigation. Excess tort costs have traditionally been a hidden tax on Oklahoma's economy, passed on to consumers through higher prices and to workers through lost jobs. Addressing this problem is essential for a more business-friendly environment in the state.
The Setbacks: Regulatory Inconsistency Undermines the Pro-Business Message
Even as Oklahoma celebrates historic tort reform and unprecedented business deals, lawmakers have advanced policies that create regulatory complexity and restrictions on healthcare markets, sending mixed signals about the state's commitment to business-friendly governance.
Senate Bill 577: Increased Reporting Burdens on Manufacturers
Senate Bill 577 amended requirements for manufacturing facilities claiming the five-year ad valorem (property) tax exemption, forcing companies to submit additional detailed reports to relevant state agencies.
While this creates accountability around tax incentive programs, it also creates new costs and administrative burdens for large companies that heavily use this incentive. For big businesses with multiple qualifying projects and complex staffing, this adds significant compliance and systems costs.
The underlying principle - ensuring accountability for tax incentives - is sound. But the execution creates unnecessary compliance burden that could discourage major manufacturers from using these programs, thereby undermining the state's competitiveness for large manufacturing investments.
SB 789: Pharmacy Benefit Manager Restrictions and Higher Drug Prices
Senate Bill 789, which passed the legislature and became law in May 2025, mandates reimbursement rates, prohibits effective rate contracting, and codifies other provisions that restrict PBMs from operating efficiently.
Here's the critical point: even legislators admit that SB 789 will drive up the prices of Oklahomans' prescription drugs, mainly to keep afloat small, independent pharmacies. This is government intervention in markets that will ultimately harm consumers.
Consumers ultimately pay the price as costs get passed on. This contradicts Oklahoma's positioning as the #1 state for low cost of doing business. When the state restricts PBMs' ability to negotiate prices and operate efficiently, it drives up drug costs for consumers, directly contradicting the low-cost positioning that is Oklahoma's primary competitive advantage.
This is a particularly troubling setback because it demonstrates how ideology can override economic sense. Oklahoma just achieved its most successful month of economic development in state history and secured a $4 billion aluminum plant investment. The last thing the state should be doing is restricting healthcare markets in ways that will increase costs for businesses and consumers.
What Oklahoma's 2025 Teaches Us
Oklahoma's 2025 is a story of genuine economic achievement shadowed by regulatory inconsistency. The state has discovered a winning formula: be the lowest-cost place to do business, combine that with strategic incentives for critical industries, and pursue comprehensive tort reform to create a legal system that doesn't handicap business.
But SB 577's reporting burdens on manufacturers, the REIGNS Act's legislative approval requirements for major regulations, and SB 789's restrictions on pharmaceutical benefit managers create unnecessary friction that could undermine momentum. These policies signal that some in Oklahoma government still view business with skepticism rather than partnership.
The lesson is straightforward: Oklahoma's competitive advantage depends on consistency. When the state creates reporting burdens that discourage manufacturers from using tax exemptions, or restricts PBMs in ways that increase drug costs, it undermines the low-cost-of-doing-business brand that is the foundation of Oklahoma's economic strategy.
As Oklahoma heads into 2026, the state should double down on what's working: low costs, strategic incentives for critical industries, and pro-business legal reform. And it should avoid the temptation to intervene in healthcare markets or impose unnecessary compliance burdens that contradict the state's core economic development strategy.