Missouri Legislature Passes Income Tax Cut
Bill moves to Gov. Jay Nixon
The Missouri Legislature has approved tax cut legislation that would reduce personal income and corporate taxes but remove the controversial sales tax increase provision found in previous versions of the bill. This would be the state's first income tax cut in more than 90 years. Below are highlights of what the legislation proposes:
Corporate Income Taxes
- The bill proposes to gradually decrease the current 6.25% income tax rate to 3.25% over the next 10 years.
Individual Income Taxes
- The bill proposes the top individual income tax rate of 6% be reduced to 5.5% over the next 10 years.
- The bill proposes that a resident with an adjusted gross income below $20,000 receive an additional $1,000 personal exemption deduction on individual income taxes, starting in 2014.
- The bill allows for a phase in deduction of 10% of an individual's business income starting in 2014 and increasing to 50% of business income for tax years after 2017.
These annual tax rate reductions would only take effect if state revenue grows by $100 million compared to the highest state revenue point of the previous three years.
Although the legislature has approved the bill, Gov. Nixon has expressed "concerns," indicating he may veto it. Now is a good time to speak to your tax advisor about the possible impact to your business.