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SECOND REGULAR SESSION
HOUSE BILL NO. 2679
103RD GENERAL ASSEMBL Y
INTRODUCED BY REPRESENT A TIVE JOHNSON.
5745H.01I JOSEPH ENGLER, Chief Clerk
AN ACT
T o amend chapter 143, RSMo, by adding thereto seven new sections relating to the first-time
business owner savings account act, with penalty provisions.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Chapter 143, RSMo, is amended by adding thereto seven new sections, to
2 be known as sections 143.1 140, 143.1 141, 143.1 143, 143.1 144, 143.1 145, 143.1 146, and
3 143.1 147, to read as follows:
143.1 140. 1. This section shall be known and may be cited as the "First-T ime
2 Business Owner T ax Deduction Act".
3 2. As used in this section, the following terms mean:
4 (1) "Deduction", an amount subtracted fro m the taxpayer's Missouri adjusted
5 gr oss income to determine Missouri taxable income for the tax year in which such
6 deduction is claimed;
7 (2) "Eligible expenses", the same meaning as that term is defined under section
8 143.1 143;
9 (3) "First-time business owner savings account", the same meaning as that term
10 is defined under section 143.1 143;
11 (4) "First-time business owner savings account act", sections 143.1 141 to
12 143.1 147;
13 (5) "T axpayer", any individual who is a res ident of this state and subject to the
14 income tax imposed under this chapter , excluding withholding tax imposed under
15 sections 143.191 to 143.265.
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 3. For all tax years beginning on or after January 1, 2027, a taxpayer shall be
17 allowed a deduction equal to fifty perc ent of the taxpayer's contributions to a first-time
18 business owner savings account in the tax year of the contribution.
19 4. The amount of the deduction claimed shall not exceed the amount of the
20 taxpayer's Missouri adjusted gr oss income for the tax year the deduction is claimed.
21 5. The assets of a first-time business owner savings account and any income
22 ther efro m shall be exempt fr om all taxation by the state or any of its political
23 subdivisions. Income earned or r eceived as a res ult of assets in a first-time business
24 owner savings account shall not be subject to state income tax imposed under chapter
25 143. The exemption fro m taxation under this section shall apply only to assets and
26 income maintained, accrued, or expended under the r equir ements of the first-time
27 business owner savings account act, and no exemption shall apply to assets and income
28 expended for any other purposes. Annual contributions made to the savings pr ogram,
29 up to and including eight hundr ed dollars per participating taxpayer or up to and
30 including one thousand six hundred dollars for married individuals filing a combined
31 tax r eturn, shall be subtracted fr om gross income to determine Missouri adjusted gr oss
32 income under section 143.121.
33 6. If any deductible contributions to or earnings fro m the pr ogram r eferre d to in
34 this section are distributed and not used to pay for eligible expenses or ar e not held for
35 the minimum length of time under subsection 2 of section 143.1 145, the amount so
36 distributed shall be added to the Missouri adjusted gr oss income of the participant or , if
37 the participant is not living, the amount shall be added to the Missouri adjusted gr oss
38 income of the participant's beneficiary .
39 7. The department of rev enue shall pr omulgate all necessary rules and
40 r egulations for the administration of this section. Any rule or portion of a rule, as that
41 term is defined in section 536.010, that is creat ed under the authority delegated in this
42 section shall become effective only if it complies with and is subject to all of the
43 pr ovisions of chapter 536 and, if applicable, section 536.028. This section and chapter
44 536 are nonseverable and if any of the powers vested with the general assembly
45 pursuant to chapter 536 to revi ew , to delay the effective date, or to disappr ove and annul
46 a rule are subsequently held unconstitutional, then the grant of rulemaking authority
47 and any rule prop osed or adopted after August 28, 2026, shall be invalid and void.
48 8. Under section 23.253 of the Missouri sunset act:
49 (1) The pr ovisions of the new pr ogram authorized under this section shall
50 automatically sunset on December thirty-first six years after the effective date of this
51 section unless r eauthorized by an act of the general assembly; and
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52 (2) This section shall terminate on September first of the calendar year
53 immediately following the calendar year in which the prog ram authorized under this
54 section is sunset.
143.1 141. Sections 143.1 141 to 143.1 147 shall be known and may be cited as the
2 "First-T ime Business Owner Savings Account Act".
143.1 143. As used in sections 143.1 141 to 143.1 147, the following terms mean:
2 (1) "Account holder", an individual who establishes an account with a financial
3 institution that is designated as a first-time business owner savings account in
4 accordance with section 143.1 144;
5 (2) "Department", the department of revenu e;
6 (3) "Eligible expenses", any business expenses that res ult fr om the start-up of a
7 new business or that occur during the first month of a new business including, but not
8 limited to, incorporation fees, legal fees, marketing expenses, purch ases of equipment,
9 inventory , rea l estate, or supplies, r ent, security deposits, vehicles, or wages of
10 employees;
11 (4) "Financial institution", any state bank, state trust company , savings and loan
12 association, federally chartered cred it union doing business in this state, cr edit union
13 charter ed by the state of Missouri, national bank, bro ker -dealer , mutual fund, insurance
14 company , or other similar financial entity qualified to do business in this state;
15 (5) "First-time business owner", an individual who:
16 (a) Either individually or jointly , has never owned, been a partner in, or held the
17 majority of shar es in a sole pro prietorship, partnership, corporation, or limited liability
18 company; and
19 (b) Is a member of a minority;
20 (6) "First-time business owner savings account" or "account", an account with a
21 financial institution designated as such in accordance with subsection 1 of section
22 143.1 144;
23 (7) "Member of a minority", any individual who has been subjected to racial or
24 ethnic prej udice or cultural bias because of his or her identity as a member of a grou p
25 without regard to his or her individual qualities. Such group s shall include, but not be
26 limited to, gr oups based on race, color , reli gion, sex, or national origin;
27 (8) "Qualified beneficiary", a first-time business owner , designated by an
28 account holder , for whose eligible expenses the moneys in a first-time business owner
29 savings account ar e or will be used.
143.1 144. 1. Beginning January 1, 2027, any individual may open an account
2 with a financial institution and designate the account, in its entiret y , as a first-time
3 business owner savings account to be used to pay or re imburse a qualified beneficiary's
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4 eligible expenses for starting a new business. An individual may be the account holder
5 of multiple accounts, and an individual may jointly own the account with another
6 person if such persons file a joint income tax r eturn. T o be eligible for the tax deduction
7 under section 143.1 140, an account holder shall comply with the requi rem ents of this
8 section.
9 2. An account holder shall designate, no later than April fifteenth of the year
10 following the tax year in which the account was established, a first-time business owner
11 as the qualified beneficiary of the first-time business owner savings account. The
12 account holder may designate himself or herself as the qualified beneficiary . The
13 account holder may change the designated qualified beneficiary at any time, but no
14 first-time business owner savings account shall have mor e than one qualified beneficiary
15 at any time. No account holder shall have multiple accounts with the same qualified
16 beneficiary , but an individual may be designated as the qualified beneficiary of multiple
17 accounts.
18 3. (1) The following limits apply to a first-time business owner savings account:
19 (a) The maximum contribution to a first-time business owner savings account is
20 one thousand six hundr ed dollars per year for an individual and thr ee thousand two
21 hundr ed dollars per year for account holders who file a joint tax r eturn;
22 (b) The maximum amount of all contributions for all tax years to a first-time
23 business owner savings account is twenty thousand dollars; and
24 (c) The maximum balance of a first-time business owner savings account is
25 thirty thousand dollars.
26 (2) If a limit in subdivision (1) of this subsection is exceeded, ther eafter no
27 inter est or other income earned on the investment of moneys in the first-time business
28 owner savings account shall be included in the tax exemption under section 143.1 140.
29 (3) Moneys may re main in a first-time business owner savings account for an
30 unlimited duration without the inter est or income being subject to recap tur e or penalty .
31 4. The account holder shall not use moneys in an account to pay expenses of
32 administering the account, except that a service fee may be deducted fr om the account
33 by a financial institution. The account holder shall be r esponsible for maintaining
34 documentation for the first-time business owner savings account and for eligible
35 expenses rel ated to the qualified beneficiary starting a new business.
143.1 145. 1. (1) For purposes of the tax benefit conferr ed under the first-time
2 business owner savings account act, the moneys in a first-time business owner savings
3 account may be:
4 (a) Used for eligible expenses r elated to a qualified beneficiary starting a new
5 business located in this state;
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6 (b) Used for eligible expenses rel ated to a qualified beneficiary starting a new
7 business located outside this state if the qualified beneficiary is active-duty military and
8 was stationed in Missouri for any time after the crea tion of the account;
9 (c) T ransferr ed to another newly creat ed first-time business owner savings
10 account; and
11 (d) Used to pay a service fee that is deducted by the financial institution.
12 (2) Subdivision (1) of this subsection applies whether the qualified beneficiary is
13 the sole owner of the new business or a joint owner with another person who does not
14 qualify as a qualified beneficiary .
15 2. Moneys withdrawn fro m a first-time business owner savings account shall be
16 subject to r ecapture in the tax year in which such moneys are withdrawn if:
17 (1) At the time of the withdrawal, it has been less than a year since the first
18 deposit in the first-time business owner savings account; or
19 (2) The moneys ar e used for any purpose other than those specified under
20 subsection 1 of this section.
21
22 The recaptur e shall be an amount equal to the moneys withdrawn and shall be added to
23 the Missouri adjusted gr oss income of the account holder or , if the account holder is not
24 living, the qualified beneficiary .
25 3. If any moneys ar e subject to recaptur e under subsection 2 of this section, the
26 account holder shall pay to the department a penalty in the same tax year as the
27 r ecapture. If the withdrawal was made in ten or fewer years after the first deposit in the
28 first-time business owner savings account, the penalty shall be equal to five per cent of
29 the amount subject to r ecapture, and, if the withdrawal was made mor e than ten years
30 after the first deposit in the account, the penalty shall be equal to ten perce nt of the
31 amount subject to recap tur e. These penalties shall not apply if:
32 (1) The withdrawn moneys are used for eligible expenses rel ated to a qualified
33 beneficiary starting a new business outside of the state; or
34 (2) The withdrawn moneys ar e fro m a first-time business owner savings account
35 for which the qualified beneficiary died and the account holder does not designate a new
36 qualified beneficiary during the same tax year .
37 4. If the account holder dies or , if the first-time business owner savings account is
38 jointly owned, the account holders die and the account does not have a surviving
39 transfer -on-death beneficiary , all of the moneys in the account that were used for a tax
40 deduction under section 143.1 140 shall be subject to recap tur e in the tax year of the
41 death or deaths, but no penalty shall be due to the department.
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143.1 146. 1. The department shall establish forms for an account holder to
2 annually repor t information about a first-time business owner savings account
3 including, but not limited to, how the moneys withdrawn fr om the fund are used, and
4 shall identify any supporting documentation that is requ ired to be maintained. T o be
5 eligible for the tax deduction under section 143.1 140, an account holder shall annually
6 file with the account holder's state income tax ret urn all forms req uired by the
7 department under this section, any Internal Revenue Service Form 1099 Series forms
8 for the account issued by the financial institution, and any other supporting
9 documentation the department re quir es.
10 2. The department may pr omulgate rules and r egulations necessary to
11 administer the prov isions of the first-time business owner savings account act. Any
12 rule or portion of a rule, as that term is defined in section 536.010, that is creat ed under
13 the authority delegated in this section shall become effective only if it complies with and
14 is subject to all of the pr ovisions of chapter 536 and, if applicable, section 536.028. This
15 section and chapter 536 are nonseverable and if any of the powers vested with the
16 general assembly pursuant to chapter 536 to revie w , to delay the effective date, or to
17 disappr ove and annul a rule ar e subsequently held unconstitutional, then the grant of
18 rulemaking authority and any rule pr oposed or adopted after August 28, 2026, shall be
19 invalid and void.
143.1 147. 1. No financial institution shall be req uired to:
2 (1) Designate an account as a first-time business owner savings account or
3 designate the beneficiaries of an account in the financial institution's account contracts
4 or systems or in any other way;
5 (2) T rack the use of moneys withdrawn fro m a first-time business owner savings
6 account; or
7 (3) Report any information to the department or any other governmental agency
8 that is not otherwise requ ired by law .
9 2. No financial institution shall be res ponsible or liable for:
10 (1) Determining or ensuring that an account holder is eligible for a tax deduction
11 under section 143.1 140;
12 (2) Determining or ensuring that moneys in the account ar e used for eligible
13 expenses; or
14 (3) Reporting or r emitting taxes or penalties rela ted to use of moneys in a first-
15 time business owner savings account.
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16 3. In implementing section 143.1 140 and sections 143.1 141 to 143.1 147, the
17 department shall not establish any administrative, repo rting, or other requi rem ents on
18 financial institutions that are outside the scope of normal account pr ocedur es.
✔
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