Modifies provisions relating to income tax

SECOND REGULAR SESSION
HOUSE BILL NO. 2575
103RD GENERAL ASSEMBL Y
INTRODUCED BY REPRESENT A TIVE HRUZA.
6018H.01I JOSEPH ENGLER, Chief Clerk
AN ACT
T o repeal sections 143.01 1, 143.031, 143.131, and 143.177, RSMo, and to enact in lieu
thereof three new sections relating to income tax.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Sections 143.01 1, 143.031, 143.131, and 143.177, RSMo, are repealed and
2 three new sections enacted in lieu thereof, to be known as sections 143.01 1, 143.031, and
3 143.131, to read as follows:
143.01 1. 1. For all tax years beginning on or before December 31, 2026, a tax is
2 hereby imposed for every [ taxable ] tax year on the Missouri taxable income of every resident.
3 The tax shall be determined by applying the tax table or the rate provided in section 143.021,
4 which is based upon the following rates:
5 If the Missouri taxable income
6 is:
The tax is:
7 Not over $1,000.00 1 1/2% of the Missouri taxable income
8 Over $1,000 but not over
9 $2,000
$15 plus 2% of excess over $1,000
10 Over $2,000 but not over
11 $3,000
$35 plus 2 1/2% of excess over $2,000
12 Over $3,000 but not over
13 $4,000
$60 plus 3% of excess over $3,000
14 Over $4,000 but not over
15 $5,000
$90 plus 3 1/2% of excess over $4,000
EXPLANA TION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is
intended to be omitted from the law . Matter in bold-face type in the above bill is proposed language.
16 Over $5,000 but not over
17 $6,000
$125 plus 4% of excess over $5,000
18 Over $6,000 but not over
19 $7,000
$165 plus 4 1/2% of excess over $6,000
20 Over $7,000 but not over
21 $8,000
$210 plus 5% of excess over $7,000
22 Over $8,000 but not over
23 $9,000
$260 plus 5 1/2% of excess over $8,000
24 Over $9,000 $315 plus 6% of excess over $9,000
25 2. (1) Notwithstanding the provisions of subsection 1 of this section to the contrary ,
26 beginning with the 2023 calendar year , but ending on or befor e December 31, 2026, the top
27 rate of tax pursuant to subsection 1 of this section shall be four and ninety-five hundredths
28 percent.
29 (2) The modification of tax rates made pursuant to this subsection shall apply only to
30 tax years that begin on or after January 1, 2023 , but before January 1, 2027 .
31 (3) The director of the department of revenue shall, by rule, adjust the tax table
32 provided in subsection 1 of this section to effectuat e the provisions of this subsection. The
33 top remaining rate of tax shall apply to all income in excess of seven thousand dollars, as
34 adjusted pursuant to subsection 5 of this section.
35 3. (1) For all tax years beginning on or after January 1, 2027, a tax is her eby
36 imposed for every tax year on the Missouri taxable income of every res ident of this state
37 at a rate of four and seven-tenths percen t, or the top rate of tax as in effect on January 1,
38 2027, whichever is less. The tax shall be determined by the application of the income
39 pr ovisions pro vided under section 143.021.
40 (2) Any modification of the tax rate under this subsection shall apply only to tax
41 years that begin on or after a modification takes effect.
42 (3) The department of reven ue shall, by rule and by posting on the department's
43 website, adjust the appr opriate tax rate to effectuate the pr ovisions of this subsection.
44 4. (1) In addition to the rate reduction under [ subsection ] subsections 2 and 3 of this
45 section, beginning with the 2024 calendar year , the [ top ] rate of tax under subsection [ 1 ] 3 of
46 this section may be reduced by fifteen hundredths of a percent. A reduction in the rate of tax
47 shall take ef fect on January first of a calendar year and such reduced rates shall continue in
48 ef fect until the next reduction occurs. There shall be no cap on the number of re ductions
49 that may occur under this subsection, and red uctions may continue until the personal
50 income tax rate has been redu ced to zero per cent. Upon red uction to zer o per cent, the
51 personal income tax rate shall rem ain at zer o per cent and shall be eliminated.
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52 (2) A reduction in the rate of tax shall only occur if the amount of net general revenue
53 collected in the previous fiscal year exceeds the highest amount of net general revenue
54 collected in any of the three fiscal years prior to such fiscal year by at least one hundred
55 seventy-five million dollars.
56 (3) Any modification of tax rates under this subsection shall only apply to tax years
57 that begin on or after a modification takes ef fect.
58 (4) The director of the department of revenue shall, by rule, adjust the tax [ tables ]
59 rate under subsection [ 1 ] 3 of this section to ef fectuate the provisions of this subsection.
60 [ 4. ] 5. (1) In addition to the rate reductions under subsections 2 , 3, and [ 3 ] 4 of this
61 section, beginning with the calendar year immediately following the calendar year in which a
62 reduction is made pursuant to subsection [ 3 ] 4 of this section, the top rate of tax under
63 subsection 1 of this section may be further reduced over a period of years. Each reduction in
64 the top rate of tax shall be by one-tenth of a percent and no more than one reduction shall
65 occur in a calendar year . [ No more than three reductions shall be made under this subsection. ]
66 Ther e shall be no cap on the number of redu ctions that may occur under this subsection,
67 and reduction s may continue until the personal income tax rate has been redu ced to
68 zer o perc ent. Upon redu ction to zer o percen t, the personal income tax rate shall r emain
69 at zero per cent and shall be eliminated. Reductions in the rate of tax shall take ef fect on
70 January first of a calendar year and such reduced rates shall continue in effect until the next
71 reduction occurs.
72 (2) (a) A reduction in the rate of tax shall only occur if:
73 a. The amount of net general revenue collected in the previous fiscal year exceeds the
74 highest amount of net general revenue collected in any of the three fiscal years prior to such
75 fiscal year by at least two hundred million dollars; and
76 b. The amount of net general revenue collected in the previous fiscal year exceeds the
77 amount of net general revenue collected in the fiscal year five years prior , adjusted annually
78 by the percentage increase in inflation over the preceding five fiscal years.
79 (b) The amount of net general revenue collected required by subparagraph a. of
80 paragraph (a) of this subdivision in order to make a reduction pursuant to this subsection shall
81 be adjusted annually by the percent increase in inflation beginning with January 2, 2023.
82 (3) Any modification of tax rates under this subsection shall only apply to tax years
83 that begin on or after a modification takes ef fect.
84 (4) The director of the department of revenue shall, by rule, adjust the tax tables under
85 subsection 1 of this section to ef fectuate the provisions of this subsection. The bracket for
86 income subject to the top rate of tax shall be eliminated once the top rate of tax has been
87 reduced below the rate applicable to such bracket, and the top remaining rate of tax shall
88 apply to all income in excess of the income in the second highest remaining income bracket.
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89 [ 5. ] 6. Beginning with the 2017 calendar year , and ending on or befor e December
90 31, 2026, the brackets of Missouri taxable income identified in subsection 1 of this section
91 shall be adjusted annually by the percent increase in inflation. The director shall publish such
92 brackets annually beginning on or after October 1, 2016. Modifications to the brackets shall
93 take ef fect on January first of each calendar year and shall apply to tax years beginning on or
94 after the ef fective date of the new brackets.
95 [ 6. ] 7. As used in this section, the following terms mean:
96 (1) "CPI", the Consumer Price Index for All Urban Consumers for the United States
97 as reported by the Bureau of Labor Statistics, or its successor index;
98 (2) "CPI for the preceding calendar year", the average of the CPI as of the close of the
99 twelve-month period ending on August thirty-first of such calendar year;
100 (3) "Net general revenue collected", all revenue deposited into the general revenue
101 fund, less refunds and revenues originally deposited into the general revenue fund but
102 designated by law for a specific distribution or transfer to another state fund;
103 (4) "Percent increase in inflation", the percentage, if any , by which the CPI for the
104 preceding calendar year exceeds the CPI for the year beginning September 1, 2014, and
105 ending August 31, 2015.
143.031. 1. A husband and wife who file a joint federal income tax return shall file a
2 combined return. A husband and wife who do not file a joint federal income tax return shall
3 not file a combined return.
4 2. The Missouri combined taxable income on a combined return shall include all of
5 the income and deductions of the husband and wife. For all tax years ending on or before
6 December 31, 2026, the Missouri taxable income of each spouse shall be an amount that is
7 the same proportion of their Missouri combined taxable income as the Missouri adjusted
8 gross income of that spouse bears to their Missouri combined adjusted gross income. For all
9 tax years beginning on or after January 1, 2027, ther e shall be one column for the
10 calculation of total Missouri combined adjusted gr oss income on a Missouri income tax
11 r eturn.
12 3. The tax of each spouse shall be determined by the application of either section
13 143.021 or section 143.041 depending upon whether such spouse is a resident or nonresident.
14 Their Missouri combined tax shall be the sum of the tax applicable to each spouse.
143.131. 1. The Missouri standard deduction may be deducted in determining
2 Missouri taxable income of a resident individual unless the taxpayer or his spouse has elected
3 to itemize his deduction as provided in section 143.141.
4 2. (1) For all tax years ending on or before December 31, 2026, the Missouri
5 standard deduction shall be the allowable federal standard deduction.
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6 (2) For all tax years beginning on or after January 1, 2027, the Missouri
7 standard deduction shall be the allowable federal standard deduction plus four
8 thousand dollars.
[ 143.177. 1. This section shall be known and may be cited as the
2 "Missouri W orking Family T ax Credit Act".
3 2. For purposes of this section, the following terms shall mean:
4 (1) "Department", the department of revenue;
5 (2) "Eligible taxpayer", a resident individual with a filing status of
6 single, head of household, widowed, or married filing combined who is subject
7 to the tax imposed under this chapter , excluding withholding tax imposed
8 under sections 143.191 to 143.265, and who is allowed a federal earned
9 income tax credit under 26 U.S.C. Section 32, as amended;
10 (3) "T ax credit", a credit against the tax otherwise due under this
11 chapter , excluding withholding tax imposed under sections 143.191 to
12 143.265.
13 3. (1) Beginning with the 2023 calendar year , an eligible taxpayer
14 shall be allowed a tax credit in an amount equal to a percentage of the amount
15 such taxpayer would receive under the federal earned income tax credit as
16 such credit existed under 26 U.S.C. Section 32 as of January 1, 2021, as
17 provided pursuant to subdivision (2) of this subsection. The tax credit allowed
18 by this section shall be claimed by such taxpayer at the time such taxpayer
19 files a return and shall be applied against the income tax liability imposed by
20 this chapter after reduction for all other credits allowed thereon. If the amount
21 of the credit exceeds the tax liability , the dif ference shall not be refunded to the
22 taxpayer and shall not be carried forward to any subsequent tax year .
23 (2) Subject to the provisions of subdivision (3) of this subsection, the
24 percentage of the federal earned income tax credit to be allowed as a tax credit
25 pursuant to subdivision (1) of this subsection shall be ten percent, which may
26 be increased to twenty percent subject to the provisions of subdivision (3) of
27 this subsection. The maximum percentage that may be claimed as a tax credit
28 pursuant to this section shall be twenty percent of the federal earned income
29 tax credit that may be claimed by such taxpayer . Any increase in the
30 percentage that may be claimed as a tax credit shall take ef fect on January first
31 of a calendar year and such percentage shall continue in ef fect until the next
32 percentage increase occurs. An increase shall only apply to tax years that
33 begin on or after the increase takes ef fect.
34 (3) The initial percentage to be claimed as a tax credit and any increase
35 in the percentage that may be claimed pursuant to subdivision (2) of this
36 subsection shall only occur if the amount of net general revenue collected in
37 the previous fiscal year exceeds the highest amount of net general revenue
38 collected in any of the three fiscal years prior to such fiscal year by at least one
39 hundred fifty million dollars.
40 4. Notwithstanding the provisions of section 32.057 to the contrary ,
41 the department shall determine whether any taxpayer filing a report or return
42 with the department who did not apply for the credit authorized under this
43 section may qualify for the credit and, if so, determines a taxpayer may qualify
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44 for the credit, shall notify such taxpayer of his or her potential eligibility . In
45 making a determination of eligibility under this section, the department shall
46 use any appropriate and available data including, but not limited to, data
47 available from the Internal Revenue Service, the U.S. Department of T reasury ,
48 and state income tax returns from previous tax years.
49 5. The department shall prepare an annual report containing statistical
50 information regarding the tax credits issued under this section for the previous
51 tax year , including the total amount of revenue expended, the number of
52 credits claimed, and the average value of the credits issued to taxpayers whose
53 earned income falls within various income ranges determined by the
54 department.
55 6. The director of the department may promulgate rules and
56 regulations to administer the provisions of this section. Any rule or portion
57 of a rule, as that term is defined in section 536.010, that is created under the
58 authority delegated in this section shall become effective only if it complies
59 with and is subject to all of the provisions of chapter 536 and, if applicable,
60 section 536.028. This section and chapter 536 are nonseverable and if any of
61 the powers vested with the general assembly pursuant to chapter 536 to review ,
62 to delay the ef fective date, or to disapprove and annul a rule are subsequently
63 held unconstitutional, then the grant of rulemaking authority and any rule
64 proposed or adopted after January 1, 2023, shall be invalid and void.
65 7. T ax credits authorized under this section shall not be subject to the
66 requirements of sections 135.800 to 135.830. ]
✔
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