First Missouri State Tax Cut in Almost a Century
The Missouri Legislature has overridden a veto put in place by Governor Jeremiah Nixon in order to enact the first individual income tax cut for Missouri taxpayers in almost a century. The tax cut will lower the highest individual income tax from 6% to 5.5% over time, beginning in 2017. The income tax rate will be reduced by 0.1% in each year that Missouri’s state revenue increases $150 million over the highest revenue from the three previous fiscal years.
The act put in place by the Missouri House of Representatives and Senate will also phase-in a deduction to individuals with business income. Taxpayers will be able to deduct an additional 5% of their business income in each year that the Missouri state’s revenue grows by $150 million, up to a total of a 25% deduction. Owners in S-corporations and partnerships will also receive a deduction in proportion to their percent of ownership.
This act also increases the personal exemption for individuals earning less than $20,000 by $500. Missouri tax brackets have been updated in the act to include inflation as well.
About 2.5 million individuals and families stand to benefit from these tax cuts. The additional money in Missouri taxpayer’s pockets could provide a boost to the Missouri economy, as well as draw individuals, families, and businesses to the state. Other states, such as New York, Oklahoma, and Kansas have also recently passed legislation that will lower their individual income tax rates in an effort to provide a surge to their economies.
Please contact an Anders advisor with any questions as to how this individual income tax cut will affect you.