HOUSE BILL NO. 1563 103RD GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVE WALSH MOORE.
2489H.01I JOSEPH ENGLER, Chief Clerk
AN ACT To repeal section 143.121, RSMo, and to enact in lieu thereof ten new sections relating to leave from employment, with a referendum clause.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Section 143.121, RSMo, is repealed and ten new sections enacted in lieu 2 thereof, to be known as sections 143.121, 285.400, 285.405, 285.410, 285.415, 285.420, 3 285.425, 285.430, 285.435, and 285.440, to read as follows: 143.121. 1. The Missouri adjusted gross income of a resident individual shall be the 2 taxpayer's federal adjusted gross income subject to the modifications in this section. 3 2. There shall be added to the taxpayer's federal adjusted gross income: 4 (1) The amount of any federal income tax refund received for a prior year which 5 resulted in a Missouri income tax benefit. The amount added pursuant to this subdivision 6 shall not include any amount of a federal income tax refund attributable to a tax credit 7 reducing a taxpayer's federal tax liability pursuant to Public Law 116-136 or 116-260, enacted 8 by the 116th United States Congress, for the tax year beginning on or after January 1, 2020, 9 and ending on or before December 31, 2020, and deducted from Missouri adjusted gross 10 income pursuant to section 143.171. The amount added under this subdivision shall also not 11 include any amount of a federal income tax refund attributable to a tax credit reducing a 12 taxpayer's federal tax liability under any other federal law that provides direct economic 13 impact payments to taxpayers to mitigate financial challenges related to the COVID-19 14 pandemic, and deducted from Missouri adjusted gross income under section 143.171; 15 (2) Interest on certain governmental obligations excluded from federal gross income 16 by 26 U.S.C. Section 103 of the Internal Revenue Code, as amended. The previous sentence
EXPLANATION — 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. HB 1563 2
17 shall not apply to interest on obligations of the state of Missouri or any of its political 18 subdivisions or authorities and shall not apply to the interest described in subdivision (1) of 19 subsection 3 of this section. The amount added pursuant to this subdivision shall be reduced 20 by the amounts applicable to such interest that would have been deductible in computing the 21 taxable income of the taxpayer except only for the application of 26 U.S.C. Section 265 of the 22 Internal Revenue Code, as amended. The reduction shall only be made if it is at least five 23 hundred dollars; 24 (3) The amount of any deduction that is included in the computation of federal 25 taxable income pursuant to 26 U.S.C. Section 168 of the Internal Revenue Code as amended 26 by the Job Creation and Worker Assistance Act of 2002 to the extent the amount deducted 27 relates to property purchased on or after July 1, 2002, but before July 1, 2003, and to the 28 extent the amount deducted exceeds the amount that would have been deductible pursuant to 29 26 U.S.C. Section 168 of the Internal Revenue Code of 1986 as in effect on January 1, 2002; 30 (4) The amount of any deduction that is included in the computation of federal 31 taxable income for net operating loss allowed by 26 U.S.C. Section 172 of the Internal 32 Revenue Code of 1986, as amended, [other than the deduction allowed by 26 U.S.C. Section 33 172(b)(1)(G) and 26 U.S.C. Section 172(i) of the Internal Revenue Code of 1986, as 34 amended,] for a net operating loss the taxpayer claims in the tax year in which the net 35 operating loss occurred or carries forward for a period of more than twenty years and carries 36 backward for more than two years. Any amount of net operating loss taken against federal 37 taxable income but disallowed for Missouri income tax purposes pursuant to this subdivision 38 after June 18, 2002, may be carried forward and taken against any income on the Missouri 39 income tax return for a period of not more than twenty years from the year of the initial loss; 40 and 41 (5) For nonresident individuals in all taxable years ending on or after December 31, 42 2006, the amount of any property taxes paid to another state or a political subdivision of 43 another state for which a deduction was allowed on such nonresident's federal return in the 44 taxable year unless such state, political subdivision of a state, or the District of Columbia 45 allows a subtraction from income for property taxes paid to this state for purposes of 46 calculating income for the income tax for such state, political subdivision of a state, or the 47 District of Columbia; 48 (6) For all tax years beginning on or after January 1, 2018, any interest expense paid 49 or accrued in a previous taxable year, but allowed as a deduction under 26 U.S.C. Section 50 163, as amended, in the current taxable year by reason of the carryforward of disallowed 51 business interest provisions of 26 U.S.C. Section 163(j), as amended. For the purposes of this 52 subdivision, an interest expense is considered paid or accrued only in the first taxable year the HB 1563 3
53 deduction would have been allowable under 26 U.S.C. Section 163, as amended, if the 54 limitation under 26 U.S.C. Section 163(j), as amended, did not exist. 55 3. There shall be subtracted from the taxpayer's federal adjusted gross income the 56 following amounts to the extent included in federal adjusted gross income: 57 (1) Interest received on deposits held at a federal reserve bank or interest or dividends 58 on obligations of the United States and its territories and possessions or of any authority, 59 commission or instrumentality of the United States to the extent exempt from Missouri 60 income taxes pursuant to the laws of the United States. The amount subtracted pursuant to 61 this subdivision shall be reduced by any interest on indebtedness incurred to carry the 62 described obligations or securities and by any expenses incurred in the production of interest 63 or dividend income described in this subdivision. The reduction in the previous sentence 64 shall only apply to the extent that such expenses including amortizable bond premiums are 65 deducted in determining the taxpayer's federal adjusted gross income or included in the 66 taxpayer's Missouri itemized deduction. The reduction shall only be made if the expenses 67 total at least five hundred dollars; 68 (2) The portion of any gain, from the sale or other disposition of property having a 69 higher adjusted basis to the taxpayer for Missouri income tax purposes than for federal 70 income tax purposes on December 31, 1972, that does not exceed such difference in basis. If 71 a gain is considered a long-term capital gain for federal income tax purposes, the modification 72 shall be limited to one-half of such portion of the gain; 73 (3) The amount necessary to prevent the taxation pursuant to this chapter of any 74 annuity or other amount of income or gain which was properly included in income or gain and 75 was taxed pursuant to the laws of Missouri for a taxable year prior to January 1, 1973, to the 76 taxpayer, or to a decedent by reason of whose death the taxpayer acquired the right to receive 77 the income or gain, or to a trust or estate from which the taxpayer received the income or 78 gain; 79 (4) Accumulation distributions received by a taxpayer as a beneficiary of a trust to the 80 extent that the same are included in federal adjusted gross income; 81 (5) The amount of any state income tax refund for a prior year which was included in 82 the federal adjusted gross income; 83 (6) The portion of capital gain specified in section 135.357 that would otherwise be 84 included in federal adjusted gross income; 85 (7) The amount that would have been deducted in the computation of federal taxable 86 income pursuant to 26 U.S.C. Section 168 of the Internal Revenue Code as in effect on 87 January 1, 2002, to the extent that amount relates to property purchased on or after July 1, 88 2002, but before July 1, 2003, and to the extent that amount exceeds the amount actually HB 1563 4
89 deducted pursuant to 26 U.S.C. Section 168 of the Internal Revenue Code as amended by the 90 Job Creation and Worker Assistance Act of 2002; 91 (8) For all tax years beginning on or after January 1, 2005, the amount of any income 92 received for military service while the taxpayer serves in a combat zone which is included in 93 federal adjusted gross income and not otherwise excluded therefrom. As used in this section, 94 "combat zone" means any area which the President of the United States by Executive Order 95 designates as an area in which Armed Forces of the United States are or have engaged in 96 combat. Service is performed in a combat zone only if performed on or after the date 97 designated by the President by Executive Order as the date of the commencing of combat 98 activities in such zone, and on or before the date designated by the President by Executive 99 Order as the date of the termination of combatant activities in such zone; 100 (9) For all tax years ending on or after July 1, 2002, with respect to qualified property 101 that is sold or otherwise disposed of during a taxable year by a taxpayer and for which an 102 additional modification was made under subdivision (3) of subsection 2 of this section, the 103 amount by which additional modification made under subdivision (3) of subsection 2 of this 104 section on qualified property has not been recovered through the additional subtractions 105 provided in subdivision (7) of this subsection; 106 (10) For all tax years beginning on or after January 1, 2014, the amount of any 107 income received as payment from any program which provides compensation to agricultural 108 producers who have suffered a loss as the result of a disaster or emergency, including the: 109 (a) Livestock Forage Disaster Program; 110 (b) Livestock Indemnity Program; 111 (c) Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish; 112 (d) Emergency Conservation Program; 113 (e) Noninsured Crop Disaster Assistance Program; 114 (f) Pasture, Rangeland, Forage Pilot Insurance Program; 115 (g) Annual Forage Pilot Program; 116 (h) Livestock Risk Protection Insurance Plan; 117 (i) Livestock Gross Margin Insurance Plan; 118 (11) For all tax years beginning on or after January 1, 2018, any interest expense paid 119 or accrued in the current taxable year, but not deducted as a result of the limitation imposed 120 under 26 U.S.C. Section 163(j), as amended. For the purposes of this subdivision, an interest 121 expense is considered paid or accrued only in the first taxable year the deduction would have 122 been allowable under 26 U.S.C. Section 163, as amended, if the limitation under 26 U.S.C. 123 Section 163(j), as amended, did not exist; 124 (12) One hundred percent of any retirement benefits received by any taxpayer as a 125 result of the taxpayer's service in the Armed Forces of the United States, including reserve HB 1563 5
126 components and the National Guard of this state, as defined in 32 U.S.C. Sections 101(3) and 127 109, and any other military force organized under the laws of this state; [and] 128 (13) For all tax years beginning on or after January 1, 2022, one hundred percent of 129 any federal, state, or local grant moneys received by the taxpayer if the grant money was 130 disbursed for the express purpose of providing or expanding access to broadband internet to 131 areas of the state deemed to be lacking such access; and 132 (14) The amount contributed to the Missouri earned family and medical leave 133 fund established under section 285.435. 134 4. There shall be added to or subtracted from the taxpayer's federal adjusted gross 135 income the taxpayer's share of the Missouri fiduciary adjustment provided in section 143.351. 136 5. There shall be added to or subtracted from the taxpayer's federal adjusted gross 137 income the modifications provided in section 143.411. 138 6. In addition to the modifications to a taxpayer's federal adjusted gross income in this 139 section, to calculate Missouri adjusted gross income there shall be subtracted from the 140 taxpayer's federal adjusted gross income any gain recognized pursuant to 26 U.S.C. Section 141 1033 of the Internal Revenue Code of 1986, as amended, arising from compulsory or 142 involuntary conversion of property as a result of condemnation or the imminence thereof. 143 7. (1) As used in this subsection, "qualified health insurance premium" means the 144 amount paid during the tax year by such taxpayer for any insurance policy primarily 145 providing health care coverage for the taxpayer, the taxpayer's spouse, or the taxpayer's 146 dependents. 147 (2) In addition to the subtractions in subsection 3 of this section, one hundred percent 148 of the amount of qualified health insurance premiums shall be subtracted from the taxpayer's 149 federal adjusted gross income to the extent the amount paid for such premiums is included in 150 federal taxable income. The taxpayer shall provide the department of revenue with proof of 151 the amount of qualified health insurance premiums paid. 152 8. (1) Beginning January 1, 2014, in addition to the subtractions provided in this 153 section, one hundred percent of the cost incurred by a taxpayer for a home energy audit 154 conducted by an entity certified by the department of natural resources under section 640.153 155 or the implementation of any energy efficiency recommendations made in such an audit shall 156 be subtracted from the taxpayer's federal adjusted gross income to the extent the amount paid 157 for any such activity is included in federal taxable income. The taxpayer shall provide the 158 department of revenue with a summary of any recommendations made in a qualified home 159 energy audit, the name and certification number of the qualified home energy auditor who 160 conducted the audit, and proof of the amount paid for any activities under this subsection for 161 which a deduction is claimed. The taxpayer shall also provide a copy of the summary of any HB 1563 6
162 recommendations made in a qualified home energy audit to the department of natural 163 resources. 164 (2) At no time shall a deduction claimed under this subsection by an individual 165 taxpayer or taxpayers filing combined returns exceed one thousand dollars per year for 166 individual taxpayers or cumulatively exceed two thousand dollars per year for taxpayers 167 filing combined returns. 168 (3) Any deduction claimed under this subsection shall be claimed for the tax year in 169 which the qualified home energy audit was conducted or in which the implementation of the 170 energy efficiency recommendations occurred. If implementation of the energy efficiency 171 recommendations occurred during more than one year, the deduction may be claimed in more 172 than one year, subject to the limitations provided under subdivision (2) of this subsection. 173 (4) A deduction shall not be claimed for any otherwise eligible activity under this 174 subsection if such activity qualified for and received any rebate or other incentive through a 175 state-sponsored energy program or through an electric corporation, gas corporation, electric 176 cooperative, or municipally owned utility. 177 9. The provisions of subsection 8 of this section shall expire on December 31, 2020. 178 10. (1) As used in this subsection, the following terms mean: 179 (a) "Beginning farmer", a taxpayer who: 180 a. Has filed at least one but not more than ten Internal Revenue Service Schedule F 181 (Form 1040) Profit or Loss From Farming forms since turning eighteen years of age; 182 b. Is approved for a beginning farmer loan through the USDA Farm Service Agency 183 Beginning Farmer direct or guaranteed loan program; 184 c. Has a farming operation that is determined by the department of agriculture to be 185 new production agriculture but is the principal operator of a farm and has substantial farming 186 knowledge; or 187 d. Has been determined by the department of agriculture to be a qualified family 188 member; 189 (b) "Farm owner", an individual who owns farmland and disposes of or relinquishes 190 use of all or some portion of such farmland as follows: 191 a. A sale to a beginning farmer; 192 b. A lease or rental agreement not exceeding ten years with a beginning farmer; or 193 c. A crop-share arrangement not exceeding ten years with a beginning farmer; 194 (c) "Qualified family member", an individual who is related to a farm owner within 195 the fourth degree by blood, marriage, or adoption and who is purchasing or leasing or is in a 196 crop-share arrangement for land from all or a portion of such farm owner's farming operation. 197 (2) (a) In addition to all other subtractions authorized in this section, a taxpayer who 198 is a farm owner who sells all or a portion of such farmland to a beginning farmer may subtract HB 1563 7
199 from such taxpayer's Missouri adjusted gross income an amount to the extent included in 200 federal adjusted gross income as provided in this subdivision. 201 (b) Subject to the limitations in paragraph (c) of this subdivision, the amount that may 202 be subtracted shall be equal to the portion of capital gains received from the sale of such 203 farmland that such taxpayer receives in the tax year for which such taxpayer subtracts such 204 capital gain. 205 (c) A taxpayer may subtract the following amounts and percentages per tax year in 206 total capital gains received from the sale of such farmland under this subdivision: 207 a. For the first two million dollars received, one hundred percent; 208 b. For the next one million dollars received, eighty percent; 209 c. For the next one million dollars received, sixty percent; 210 d. For the next one million dollars received, forty percent; and 211 e. For the next one million dollars received, twenty percent. 212 (d) The department of revenue shall prepare an annual report reviewing the costs and 213 benefits and containing statistical information regarding the subtraction of capital gains 214 authorized un