Authorizes a child tax credit

SECOND REGULAR SESSION
SENATE BILL NO. 1091
103RD GENERAL ASSEMBLY
INTRODUCED BY SENATOR LEWIS.
4832S.01I KRISTINA MARTIN, Secretary
AN ACT
To amend chapter 135, RSMo, by adding thereto one new section relating to a child tax credit.
Be it enacted by the General Assembly of the State of Missouri, as follows:
Section A. Chapter 135, RSMo, is amended by adding thereto 1
one new section, to be known as section 135.320, to read as 2
follows:3
135.320. 1. This section shall be known and may be 1
cited as the "Missouri Child Tax Credit Act". 2
2. As used in this section, the following terms mean: 3
(1) "Child", an individual who bears a relationship to 4
the qualified taxpayer as a biological child, adopted child, 5
stepchild, foster child, or a descendant of any of the 6
foregoing; or a brother, sister, half-brother, half-sister, 7
stepbrother, stepsister, or a descendant of the foregoing; 8
(2) "Department", the department of revenue; 9
(3) "Qualified child", any child of the qualified 10
taxpayer who: 11
(a) Is properly listed as a dependent of the taxpayer 12
on the taxpayer's federal income tax return; 13
(b) Is under eighteen years of age at the end of the 14
tax year; 15
(c) Did not provide more than half the costs of his or 16
her own support; and 17
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(d) Lived with the taxpayer for more than half of the 18
tax year in the state of Missouri; 19
(4) "Qualified taxpayer", any resident individual who: 20
(a) Has a filing status of: 21
a. Single, head of household, or widow(er) and a 22
Missouri adjusted gross income of seventy-five thousand 23
dollars or less; or 24
b. Married filing combined and a combined Missouri 25
adjusted gross income of one hundred fifty thousand dollars 26
or less; 27
(b) Is subject to the state income tax imposed under 28
chapter 143; 29
(c) Bears a relationship to the qualified child as 30
defined under this section; and 31
(d) Is not a dependent of another individual; 32
(5) "Tax credit", a credit against the tax otherwise 33
due under chapter 143, excluding withholding tax imposed 34
under sections 143.191 to 143.265. 35
3. For all tax years beginning on or after January 1, 36
2027, a qualified taxpayer shall be allowed to claim a 37
refundable tax credit against the taxpayer's state tax 38
liability for each qualified child in the following amounts: 39
(1) Seven thousand two hundred dollars for each 40
qualified child who is under seven years of age as of the 41
close of the calendar year in which the tax year of the 42
taxpayer begins; or 43
(2) Three thousand six hundred dollars for each 44
qualified child seven years of age or older but under 45
eighteen years of age as of the close of the calendar year 46
in which the tax year of the taxpayer begins. 47
4. Except in the case of a tax year closed by reason 48
of the death of the qualified taxpayer, no tax credit under 49
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this section shall be allowed in the case of a tax year 50
covering a period of less than twelve months. 51
5. No qualified child shall be claimed for more than 52
one tax credit in the same tax year. If a child may be 53
claimed as a qualified child by two or more taxpayers for a 54
tax year beginning in the same calendar year, the department 55
may adopt rules and regulations addressing such instance and 56
reference the provisions of the Internal Revenue Code of 57
1986, as amended, or other provisions of the laws of the 58
United States relating to federal income taxes. 59
6. For a given tax year, a qualified taxpayer shall be 60
allowed to claim a cumulative amount of up to six tax 61
credits under this section. 62
7. (1) The department shall establish a program for 63
making monthly advance payments to qualified taxpayers. A 64
qualified taxpayer may apply to receive such tax credit in 65
advance of filing the taxpayer's Missouri income tax return 66
using an application or process prescribed by rule or 67
regulation or on the department's website and may elect to 68
receive such credit, upon approval by the department, in the 69
form of advanced equal monthly disbursements. Qualified 70
taxpayers opting for advanced monthly disbursements shall 71
receive: 72
(a) Six hundred dollars per month for each qualified 73
child under seven years of age; or 74
(b) Three hundred dollars per month for each qualified 75
child seven years of age or older but under eighteen years 76
of age. 77
(2) If the qualified taxpayer elects not to receive 78
advance payments of the tax credit or did not apply for the 79
advance payments, the qualified taxpayer may claim this tax 80
credit when filing his or her Missouri income tax return. 81
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(3) If a qualified taxpayer applies for advanced 82
payments of the tax credit under this section, any 83
additional amount remaining may be applied against the 84
qualified taxpayer's Missouri income tax return for the tax 85
year against which the credit was claimed. 86
(4) A qualified taxpayer applying for the advanced 87
payments shall include the qualified taxpayer's reasonably 88
estimated Missouri adjusted gross income and reasonably 89
expected filing status in the form, application, or other 90
documentation established by the department. 91
8. (1) The department shall begin accepting 2027 tax 92
year advanced payment applications for the tax credit 93
authorized under this section on or before October 1, 2026, 94
and shall allow advanced payment applications for the 2027 95
tax year through June 30, 2027. For each tax year 96
thereafter, such application period shall begin on or before 97
July first preceding the tax year for which the credit is 98
claimed and end June thirtieth of the tax year for which the 99
credit is claimed, with exceptions for amendments, 100
supplemental information, and other reasons that the 101
department may allow by rule. 102
(2) The department may begin monthly advanced payments 103
for the 2027 tax year beginning on or after January 1, 2027, 104
or immediately upon approval of the application to each 105
qualified taxpayer claiming a credit under this section each 106
year, whichever is later; and for all tax years thereafter, 107
beginning on or after each January first of the calendar 108
year for which the tax credit is claimed in advance, or 109
immediately upon approval of the application to each 110
qualified taxpayer claiming a credit under this section each 111
year, whichever is later. The advanced payments shall be 112
paid on or before the last day of each month, beginning the 113
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first month of the tax year for which the credit is claimed 114
in advance or the month following approval of the 115
application, whichever is later. 116
(3) The department may modify, during any calendar 117
year, the advanced payment amount with respect to any 118
qualified taxpayer for such calendar year to take into 119
account: 120
(a) A Missouri income tax return filed by such 121
taxpayer; and 122
(b) Any other information provided by the taxpayer to 123
the department. 124
(4) In the case of any modification under subdivision 125
(3) of this subsection, the department may adjust the amount 126
of any advanced payment made after the date of such 127
modification to properly take into account the amount by 128
which any advanced payment made before such date was greater 129
than or less than the amount that such payment would have 130
been on the basis of the advanced payment amount as so 131
modified. 132
(5) Any refunds issued from this tax credit shall be 133
offset against a qualified taxpayer's outstanding state tax 134
liabilities or certain other debts as described under 135
section 143.611 and sections 143.781 to 143.790. The 136
department may promulgate rules addressing excess advance 137
payments, recapture, reconciliation, clerical errors, how to 138
update addresses or banking information, applying for 139
additional qualifying children throughout the year, and any 140
other provisions necessary to effectuate the program under 141
this section. 142
9. No tax credit shall be allowed under this section 143
to a qualified taxpayer with respect to any qualified child 144
unless the qualified taxpayer includes the name, Social 145
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Security number, custody decrees or arrangements if 146
applicable, and any other identification documents for such 147
qualifying child that the department determines to be 148
necessary to be submitted with the application for advanced 149
payment of the tax credit or on the Missouri income tax 150
return for the tax year that the tax credit is claimed. 151
10. Notwithstanding the provisions of section 32.057 152
to the contrary, the department or any duly authorized 153
employee or agent shall determine whether any taxpayer 154
filing a report or return with the department who did not 155
apply for the credit authorized under this section may 156
qualify for the credit and, if the department or such 157
authorized employee or agent determines a taxpayer may 158
qualify for the credit, the department or such employee or 159
agent shall notify such taxpayer of his or her potential 160
eligibility. In making a determination of eligibility under 161
this section, the department shall use any appropriate and 162
available data. 163
11. Notwithstanding any provision of law to the 164
contrary, the refundable tax credit and its payment 165
authorized under this section shall be in addition to any 166
federal child tax credits under 24 U.S.C. Section 26 claimed 167
by the qualified taxpayer, and any amounts of the credit 168
paid to the taxpayer shall not be considered as assets, 169
income, or resources to the same extent the federal credit 170
and its payment would be disregarded under 26 U.S.C. Section 171
6409, not taxable as state or federal income, and not taken 172
into account as income for the purposes of determining 173
eligibility of an individual for benefits or assistance or 174
the amount or extent of benefits or assistance under any 175
state program and, to the extent permitted by federal law, 176
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under any state program financed in whole or in part with 177
federal funds. 178
12. No tax credit claimed under this section shall be 179
carried forward to any subsequent tax year. No tax credit 180
claimed under this section shall be assigned, transferred, 181
sold, or otherwise conveyed. 182
13. Tax credits authorized under this section shall 183
not be subject to the requirements of sections 135.800 to 184
135.830. 185
14. The department shall prepare an annual report 186
containing information on the effectiveness and reach of the 187
tax credit and statistical information regarding the tax 188
credits issued under this section for the previous tax year 189
including, but not limited to, the number of taxpayers 190
claiming the tax credit; the number of total credits claimed 191
and credit amount; the average claimant's income; the 192
average credit amount per child and per claimant; the total 193
amount of revenue expended; impact on family economic 194
stability; and recommendations for improvements to the tax 195
credit program. No data shall be disclosed in any form that 196
allows the personal identification of any child or taxpayer 197
to any individual or entity. 198
15. Beginning with the 2028 calendar year, the 199
department of revenue shall assess the income eligibility 200
thresholds, tax credit amount, monthly advanced payment 201
amounts, and other provisions of the Missouri child tax 202
credit under this section and shall increase such amounts 203
annually for inflation based on the Consumer Price Index for 204
All Urban Consumers for the United States, as reported by 205
the Bureau of Labor Statistics, or its successor index. 206
Modifications to the tax credit under this section shall 207
take effect on January first of each calendar year and shall 208
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apply to tax years beginning on or after the effective date 209
of the modifications. 210
16. Notwithstanding any provision of section 105.1500 211
to the contrary, any requirement to provide information, 212
documents, or records under this section, and any 213
requirement established by the department to provide 214
information, documents, or records for the purpose of 215
administering and enforcing this section shall be exempt 216
from section 105.1500. 217
17. The department of revenue shall promulgate all 218
necessary rules and regulations for the administration of 219
this section. Any rule or portion of a rule, as that term 220
is defined in section 536.010, that is created under the 221
authority delegated in this section shall become effective 222
only if it complies with and is subject to all of the 223
provisions of chapter 536 and, if applicable, section 224
536.028. This section and chapter 536 are nonseverable and 225
if any of the powers vested with the general assembly 226
pursuant to chapter 536 to review, to delay the effective 227
date, or to disapprove and annul a rule are subsequently 228
held unconstitutional, then the grant of rulemaking 229
authority and any rule proposed or adopted after August 28, 230
2026, shall be invalid and void. 231
18. Pursuant to section 23.253 of the Missouri sunset 232
act: 233
(1) The program authorized pursuant to this section 234
shall automatically sunset six years after the effective 235
date of this section unless reauthorized by an act of the 236
general assembly; 237
(2) This section shall terminate on September first of 238
the calendar year immediately following the calendar year in 239
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which the program authorized pursuant to this section is 240
sunset; and 241
(3) The provisions of this subsection shall not be 242
construed to impair or impede the state's fulfillment of any 243
obligations, including the authorization, issuance, or 244
redemption of tax credits, incurred pursuant to this section 245
prior to the date the program authorized pursuant to this 246
section is sunset. 247
19. Notwithstanding the provisions of section 1.140 to 248
the contrary, the provisions of this section shall be 249
nonseverable, and if any provision is for any reason held to 250
be invalid, such decision shall invalidate all of the 251
remaining provisions of this section. 252
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