The bill proposes the repeal of section 143.436 of the Revised Statutes of Missouri and introduces the "SALT Parity Act," which establishes a new taxation framework for pass-through entities, specifically partnerships and S corporations in Missouri. It defines key terms related to these entities and outlines their tax obligations. For tax years ending before December 31, 2026, the tax calculation will be based on income and deduction items with specific adjustments. Starting from tax years ending on or after December 31, 2026, the bill allows a twenty percent deduction of ordinary business income reported on federal tax forms for these entities, aiming to reduce their taxable income and potentially lower tax liabilities. The resulting Missouri net income or loss will be taxed at the highest individual income tax rate, with provisions for carrying forward net losses to future tax years. Additionally, the bill allows members of affected business entities to opt-out of tax imposition on their allocable items under certain conditions, while also introducing new tax credits based on their pro rata share of taxes paid by the entities. It clarifies the responsibilities of these entities regarding modifications to federal tax returns and mandates the designation of a representative for tax-related proceedings. The bill specifies that its provisions apply only to tax years ending on or after December 31, 2022, and removes a previously included paragraph on applicability. The Department of Revenue is granted authority to create implementation rules, and a nonseverability clause is included to address potential constitutional issues with the General Assembly's powers.

Statutes affected:
Introduced (6234H.01): 143.436