HOUSE BILL NO. 2754 103RD GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVE WARWICK.
5919H.02I JOSEPH ENGLER, Chief Clerk
AN ACT To repeal sections 143.011, 143.031, 143.131, and 143.177, RSMo, and to enact in lieu thereof four new sections relating to taxation.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Sections 143.011, 143.031, 143.131, and 143.177, RSMo, are repealed and 2 four new sections enacted in lieu thereof, to be known as sections 143.011, 143.031, 143.131, 3 and 143.512, to read as follows: 143.011. 1. For all tax years beginning on or before December 31, 2026, a tax is 2 hereby imposed for every [taxable] tax year on the Missouri taxable income of every resident. 3 The tax shall be determined by applying the tax table or the rate provided in section 143.021, 4 which is based upon the following rates: 5 If the Missouri taxable income The tax is: 6 is: 7 Not over $1,000.00 1 1/2% of the Missouri taxable income 8 Over $1,000 but not over $15 plus 2% of excess over $1,000 9 $2,000 10 Over $2,000 but not over $35 plus 2 1/2% of excess over $2,000 11 $3,000 12 Over $3,000 but not over $60 plus 3% of excess over $3,000 13 $4,000 14 Over $4,000 but not over $90 plus 3 1/2% of excess over $4,000 15 $5,000
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 2754 2
16 Over $5,000 but not over $125 plus 4% of excess over $5,000 17 $6,000 18 Over $6,000 but not over $165 plus 4 1/2% of excess over $6,000 19 $7,000 20 Over $7,000 but not over $210 plus 5% of excess over $7,000 21 $8,000 22 Over $8,000 but not over $260 plus 5 1/2% of excess over $8,000 23 $9,000 24 Over $9,000 $315 plus 6% of excess over $9,000 25 2. (1) Notwithstanding the provisions of subsection 1 of this section to the contrary, 26 beginning with the 2023 calendar year, but ending on or before December 31, 2026, the top 27 rate of tax pursuant to subsection 1 of this section shall be four and ninety-five hundredths 28 percent. 29 (2) The modification of tax rates made pursuant to this subsection shall apply only to 30 tax years that begin on or after January 1, 2023, but before January 1, 2027. 31 (3) The director of the department of revenue shall, by rule, adjust the tax table 32 provided in subsection 1 of this section to effectuate the provisions of this subsection. The 33 top remaining rate of tax shall apply to all income in excess of seven thousand dollars, as 34 adjusted pursuant to subsection 5 of this section. 35 3. (1) For all tax years beginning on or after January 1, 2027, a tax is hereby 36 imposed for every tax year on the Missouri taxable income of every resident of this state 37 at a rate of four and seven-tenths percent, or the top rate of tax as in effect on January 1, 38 2027, whichever is less. The tax shall be determined by the application of the income 39 provisions provided under section 143.021. 40 (2) Any modification of the tax rate under this subsection shall apply only to tax 41 years that begin on or after a modification takes effect. 42 (3) The department of revenue shall, by rule and by posting on the department's 43 website, adjust the appropriate tax rate to effectuate the provisions of this subsection. 44 4. (1) In addition to the rate [reduction] established under [subsection] subsections 2 45 and 3 of this section, beginning with the [2024] 2027 calendar year, the [top] rate of tax under 46 subsection [1] 3 of this section may be reduced by [fifteen hundredths] one-tenth of a 47 percent. No more than ten reductions shall be made under this subsection. A reduction 48 in the rate of tax shall take effect on January first of a calendar year and such reduced rates 49 shall continue in effect until the next reduction occurs. 50 (2) A reduction in the rate of tax shall only occur if the amount of net general revenue 51 collected in the previous fiscal year exceeds the highest amount of net general revenue HB 2754 3
52 collected in any of the three fiscal years prior to such fiscal year by at least one hundred 53 seventy-five million dollars. 54 (3) Any modification of tax rates under this subsection shall only apply to tax years 55 that begin on or after a modification takes effect. 56 (4) The director of the department of revenue shall, by rule, adjust the tax [tables] 57 rate under subsection [1] 3 of this section to effectuate the provisions of this subsection. 58 [4.] 5. (1) In addition to the rate reductions under subsections 2, 3, and [3] 4 of this 59 section, beginning with the calendar year immediately following the calendar year in which a 60 reduction is made pursuant to subsection [3] 4 of this section, the top rate of tax under 61 subsection 1 of this section may be further reduced over a period of years. Each reduction in 62 the top rate of tax shall be by one-tenth of a percent and no more than one reduction shall 63 occur in a calendar year. No more than three reductions shall be made under this subsection. 64 Reductions in the rate of tax shall take effect on January first of a calendar year and such 65 reduced rates shall continue in effect until the next reduction occurs. 66 (2) (a) A reduction in the rate of tax shall only occur if: 67 a. The amount of net general revenue collected in the previous fiscal year exceeds the 68 highest amount of net general revenue collected in any of the three fiscal years prior to such 69 fiscal year by at least two hundred million dollars; and 70 b. The amount of net general revenue collected in the previous fiscal year exceeds the 71 amount of net general revenue collected in the fiscal year five years prior, adjusted annually 72 by the percentage increase in inflation over the preceding five fiscal years. 73 (b) The amount of net general revenue collected required by subparagraph a. of 74 paragraph (a) of this subdivision in order to make a reduction pursuant to this subsection shall 75 be adjusted annually by the percent increase in inflation beginning with January 2, 2023. 76 (3) Any modification of tax rates under this subsection shall only apply to tax years 77 that begin on or after a modification takes effect. 78 (4) The director of the department of revenue shall, by rule, adjust the tax tables under 79 subsection 1 of this section to effectuate the provisions of this subsection. The bracket for 80 income subject to the top rate of tax shall be eliminated once the top rate of tax has been 81 reduced below the rate applicable to such bracket, and the top remaining rate of tax shall 82 apply to all income in excess of the income in the second highest remaining income bracket. 83 [5.] 6. Beginning with the 2017 calendar year, and ending on or before December 84 31, 2026, the brackets of Missouri taxable income identified in subsection 1 of this section 85 shall be adjusted annually by the percent increase in inflation. The director shall publish such 86 brackets annually beginning on or after October 1, 2016. Modifications to the brackets shall 87 take effect on January first of each calendar year and shall apply to tax years beginning on or 88 after the effective date of the new brackets. HB 2754 4
89 [6.] 7. As used in this section, the following terms mean: 90 (1) "CPI", the Consumer Price Index for All Urban Consumers for the United States 91 as reported by the Bureau of Labor Statistics, or its successor index; 92 (2) "CPI for the preceding calendar year", the average of the CPI as of the close of the 93 twelve-month period ending on August thirty-first of such calendar year; 94 (3) "Net general revenue collected", all revenue deposited into the general revenue 95 fund, less refunds and revenues originally deposited into the general revenue fund but 96 designated by law for a specific distribution or transfer to another state fund; 97 (4) "Percent increase in inflation", the percentage, if any, by which the CPI for the 98 preceding calendar year exceeds the CPI for the year beginning September 1, 2014, and 99 ending August 31, 2015. 143.031. 1. A husband and wife who file a joint federal income tax return shall file a 2 combined return. A husband and wife who do not file a joint federal income tax return shall 3 not file a combined return. 4 2. The Missouri combined taxable income on a combined return shall include all of 5 the income and deductions of the husband and wife. For all tax years ending on or before 6 December 31, 2026, the Missouri taxable income of each spouse shall be an amount that is 7 the same proportion of their Missouri combined taxable income as the Missouri adjusted 8 gross income of that spouse bears to their Missouri combined adjusted gross income. For all 9 tax years beginning on or after January 1, 2027, there shall be one column for the 10 calculation of total Missouri combined adjusted gross income on a Missouri income tax 11 return. 12 3. The tax of each spouse shall be determined by the application of either section 13 143.021 or section 143.041 depending upon whether such spouse is a resident or nonresident. 14 Their Missouri combined tax shall be the sum of the tax applicable to each spouse. 143.131. 1. The Missouri standard deduction may be deducted in determining 2 Missouri taxable income of a resident individual unless the taxpayer or his spouse has elected 3 to itemize his deduction as provided in section 143.141. 4 2. (1) For all tax years ending on or before December 31, 2026, the Missouri 5 standard deduction shall be the allowable federal standard deduction. 6 (2) For all tax years beginning on or after January 1, 2027, the Missouri 7 standard deduction shall be the allowable federal standard deduction plus four 8 thousand dollars. 143.512. In the event a taxpayer is denied part or all of a tax credit to which the 2 taxpayer has qualified pursuant to any provision of law due to lack of available funds, 3 and such denial causes a balance-due notice to be generated by the department of 4 revenue or any other redeeming agency, a taxpayer shall not be held liable for any HB 2754 5
5 penalty or interest on such balance due, provided the balance is paid or approved 6 payment arrangements have been made within sixty days from the notice of denial. Any 7 payments not timely made pursuant to this section shall be subject to penalty and 8 interest pursuant to this chapter. [143.177. 1. This section shall be known and may be cited as the 2 "Missouri Working Family Tax Credit Act". 3 2. For purposes of this section, the following terms shall mean: 4 (1) "Department", the department of revenue; 5 (2) "Eligible taxpayer", a resident individual with a filing status of 6 single, head of household, widowed, or married filing combined who is subject 7 to the tax imposed under this chapter, excluding withholding tax imposed 8 under sections 143.191 to 143.265, and who is allowed a federal earned 9 income tax credit under 26 U.S.C. Section 32, as amended; 10 (3) "Tax credit", a credit against the tax otherwise due under this 11 chapter, excluding withholding tax imposed under sections 143.191 to 12 143.265. 13 3. (1) Beginning with the 2023 calendar year, an eligible taxpayer 14 shall be allowed a tax credit in an amount equal to a percentage of the amount 15 such taxpayer would receive under the federal earned income tax credit as 16 such credit existed under 26 U.S.C. Section 32 as of January 1, 2021, as 17 provided pursuant to subdivision (2) of this subsection. The tax credit allowed 18 by this section shall be claimed by such taxpayer at the time such taxpayer 19 files a return and shall be applied against the income tax liability imposed by 20 this chapter after reduction for all other credits allowed thereon. If the amount 21 of the credit exceeds the tax liability, the difference shall not be refunded to the 22 taxpayer and shall not be carried forward to any subsequent tax year. 23 (2) Subject to the provisions of subdivision (3) of this subsection, the 24 percentage of the federal earned income tax credit to be allowed as a tax credit 25 pursuant to subdivision (1) of this subsection shall be ten percent, which may 26 be increased to twenty percent subject to the provisions of subdivision (3) of 27 this subsection. The maximum percentage that may be claimed as a tax credit 28 pursuant to this section shall be twenty percent of the federal earned income 29 tax credit that may be claimed by such taxpayer. Any increase in the 30 percentage that may be claimed as a tax credit shall take effect on January first 31 of a calendar year and such percentage shall continue in effect until the next 32 percentage increase occurs. An increase shall only apply to tax years that 33 begin on or after the increase takes effect. 34 (3) The initial percentage to be claimed as a tax credit and any increase 35 in the percentage that may be claimed pursuant to subdivision (2) of this 36 subsection shall only occur if the amount of net general revenue collected in 37 the previous fiscal year exceeds the highest amount of net general revenue 38 collected in any of the three fiscal years prior to such fiscal year by at least one 39 hundred fifty million dollars. 40 4. Notwithstanding the provisions of section 32.057 to the contrary, 41 the department shall determine whether any taxpayer filing a report or return 42 with the department who did not apply for the credit authorized under this HB 2754 6
43 section may qualify for the credit and, if so, determines a taxpayer may qualify 44 for the credit, shall notify such taxpayer of his or her potential eligibility. In 45 making a determination of eligibility under this section, the department shall 46 use any appropriate and available data including, but not limited to, data 47 available from the Internal Revenue Service, the U.S. Department of Treasury, 48 and state income tax returns from previous tax years. 49 5. The department shall prepare an annual report containing statistical 50 information regarding the tax credits issued under this section for the previous 51 tax year, including the total amount of revenue expended, the number of 52 credits claimed, and the average value of the credits issued to taxpayers whose 53 earned income falls within various income ranges determined by the 54 department. 55 6. The director of the department may promulgate rules and 56 regulations to administer the provisions of this section. Any rule or portion 57 of a rule, as that term is defined in section 536.010, that is created under the 58 authority delegated in this section shall become effective only if it complies 59 with and is subject to all of the provisions of chapter 536 and, if applicable, 60 section 536.028. This section and chapter 536 are nonseverable and if any of 61 the powers vested with the general assembly pursuant to chapter 536 to review, 62 to delay the effective date, or to disapprove and annul a rule are subsequently 63 held unconstitutional, then the grant of rulemaking authority and any rule 64 proposed or adopted after January 1, 2023, shall be invalid and void. 65 7. Tax credits authorized under this section shall not be subject to the 66 requirements of sections 135.800 to 135.830.]
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Statutes affected: