The Missouri Department of Revenue has announced the 2019 individual income tax year changes, effective for the tax year beginning January 1, 2019, which will be reflected on 2019 Missouri individual income tax returns.
Income Tax Brackets
The income tax brackets for the 2019 tax year are below.
If Missouri taxable income is:
- $0 to $104, tax is $0
- $105 – $1,053, tax is 1.5% of the Missouri taxable income
- $1,053 – $2,106, tax is $16 plus 2% of excess over $1,053
- $2,106 – $3,159, tax is $37 plus 2.5% of excess over $2,106
- $3,159 – $4,212, tax is $63 plus 3% of excess over $3,159
- $4,212 – $5,265, tax is $95 plus 3.5% of excess over $4,212
- $5,265 – $6,318, tax is $132 plus 4% of excess over $5,265
- $6,318 – $7,371, tax is $174 plus 4.5% of excess over $6,318
- $7,371 – $8,424, tax is $221 plus 5% of excess over $7,371
- Over $8,424, tax is $274 plus 5.4% of excess over $8,424
Federal Tax Deduction
There are also changes involving the federal tax deduction. Starting with the 2019 tax year, the federal tax deduction for individuals is reduced by a percentage, based on the Missouri adjusted gross income.
If Missouri adjusted gross income is:
- $25,000 or less, the federal tax deduction is multiplied by 35%
- $25,001 – $50,000, the federal tax deduction is multiplied by 25%
- $50,001 – $100,000, the federal tax deduction is multiplied by 15%
- $100,001 – $125,000, the federal tax deduction is multiplied by 5%
- $125,001 or more, the federal tax deduction is multiplied by 0%
The overall limit to the deduction remains at $5,000 and $10,000 for married filing combined returns.
New and Updated Tax Credits
Two new tax credits for 2019 are available to taxpayers:
Diaper Bank Credit
Taxpayers are allowed an income tax credit for 50% of contributions to an entity established for collecting or purchasing disposable diapers or other hygiene products. Certification of this credit is performed by the Department of Social Services.
Unmet Health, Hunger, and Hygiene Needs of Children in School Tax Credit
Taxpayers are allowed an income tax credit for 50% of contributions to an organization providing funding for unmet health and hygiene needs of children in school. Certification of this credit is performed by the Department of Social Services.
The following current tax credits have been revised:
Food Pantry Tax Credit
Taxpayers now can include donations of food or cash to local food pantries, local soup kitchens or local homeless shelters, unless the food is donated after the food’s expiration date. A taxpayer will not be allowed to claim more than one credit for a single donation.
Champion for Children Tax Credit
The cap on the cumulative amount of the credit that can be redeemed was increased from $1 million to $1.5 million for fiscal years beginning on or after July 1, 2019. The credit cannot be assigned, transferred or sold.
Maternity Home Tax Credit
The term “maternity home” under Mo. Rev. Stat. §135.600 was redefined. The option to carry the tax credit forward was reduced from four years to one year. The cap on the cumulative amount of credit that can be claimed was increased to $3.5 million beginning on or after July 1, 2019. If the amounts of credits redeemed in the fiscal year is less than the cumulative amount authorized, the difference will be carried forward to the subsequent fiscal year and added to that year’s cumulative amount. The credit cannot be assigned, transferred or sold.
Pregnancy Resource Center Tax Credit
The option to carry the tax credit forward was reduced from four years to one year. The cap on the cumulative amount of credit that can be claimed was increased to $3.5 million beginning on or after July 1, 2019. If the amounts of credits redeemed in the fiscal year is less than the cumulative amount authorized, the difference will be carried forward to the subsequent fiscal year and added to that year’s cumulative amount. The credit cannot be assigned, transferred or sold.
Other Incentive Updates
First-Time Home Buyer Deduction
Missouri passed a new deduction for first-time home buyers. Starting with the 2019 tax year, a deduction for 50% of a contribution to a First-Time Home Buyer Bank account is allowed. The amount of contribution deduction to the first-time home buyer account(s) cannot exceed $800 ($1,600 for married filing combined returns). The bank account must be established solely for the purpose of paying the expenses related to a beneficiary’s purchase of a first home. Interest accruing on the amount in the account is also exempt from Missouri income tax.
Federal Reserve Bank Interest
Starting with the 2019 tax year, a subtraction is allowed from federal adjusted gross income for the interest accrued from deposits held in a Federal Reserve Bank.
New Fund Contribution Options
Beginning with the 2019 tax year, taxpayers will have the option of contributing a minimum of $1, $2 on a married filing combined return, to the Kansas City Regional Law Enforcement Memorial Foundation Fund and the Soldiers Memorial Military Museum in St. Louis Fund.
Contact an Anders advisor to discuss your specific tax situation.
