Summit CPA has joined Anders. See how we are achieving our highest potential — together. Learn More

May 24, 2022

Missouri Bill Reintroduces R&D Tax Credit and Changes to State and Local Tax Treatment and MO Works Program

A Missouri bill, HB 2400, could affect businesses across the state with several provisions impacting the R&D tax credit, Missouri Works program, the State and Local Tax Parity Act and more. The bill was recently voted on and now heads to Governor Parson’s desk for signature.

New Missouri R&D Tax Credit

While Missouri offers a sales tax exemption for research and development (R&D) purchases made within the state, Missouri has been without a state R&D tax credit since the program expired in 2005. This pending legislation would set aside $10 million for a new R&D tax credit to help businesses finance innovation. It would also dedicate $5 million specifically to small businesses, minority-owned businesses and women-owned businesses. The tax credit would be equal to 15% of qualified research expenses and up to 20% if the research is done through a Missouri university, according to the Missouri Chamber.

Changes to the Missouri Works Program

With the current labor shortage and economic impacts of the pandemic, many businesses were unable to hire as projected. As a result, these companies would have been ineligible for the existing Missouri Works program and denied the benefits they would have received if not for the pandemic. This new legislation would offer relief by suspending the Missouri Works program when a statewide state of emergency exists for more than 16 months. It’s important to note that benefits would be suspended, but participants would not lose the opportunity to participate in the program.

State and Local Tax Opportunities

This bill would establish the State and Local Tax (SALT) Parity Act allowing partners and shareholders in flow-through entities to take full advantage of federal tax deductions and allowing credit for taxes paid in other states.

According to the Missouri Senate, current law provides that, in lieu of a corporate income tax on a pass-through entity, shareholders of such pass-through entities shall pay income tax on the shareholder’s pro rata share of the entity’s income attributable to Missouri. For tax years beginning on or after January 1, 2023, this Act allows the pass-through entity to elect to pay the tax, as described in the Act. The tax would be equal to the sum of each member’s income and loss items, as described in federal law, reduced by a deduction allowed for qualified business income, as described in federal law, and modified by current provisions of state law relating to the taxation of pass-through entities, with such sum multiplied by the highest rate of tax in effect for the state personal income tax.

There are several other provisions in HB 2400, including:

  • Changes to LLC campaign contributions
  • Changes to several tax credits, including:
    • Business headquarter tax credit
    • Tax Credit Accountability Act
    • S Corp tax credit
    • Health insurance deduction tax credit
  • Extends the Missouri RX Plan
  • Treatment of professional employer organizations
  • Requirements for gambling boat facilities
  • Modifies the Show-Me Heroes Program and Missouri One Start Program
  • Establishes the Personal Privacy Protection Act and Citizen’s Land Development Cooperative Act

Our advisors are closely following legislation changes and will continue to publish insights to keep you informed. To discuss how we can best assist you and the associated fees, contact an Anders advisor below.

All Insights

Keep up with Anders

Want to keep up with all the latest insights from Anders? Subscribe and receive the information that matters to you.