For Immediate Release:
March 12, 2013
Income Tax Reform Measure Moves to House

JEFFERSON CITY – By a vote of 23-11, members of the Missouri Senate gave their final approval today (3-12) to Senate Bill 26, sponsored by Sen. Will Kraus, R-Lee’s Summit.  The measure is designed to cut certain taxes in order to promote job growth in Missouri, one of the Senate’s legislative priorities for the 2013 legislative session. 

Senate Bill 26 would lower individual and corporate state income tax by .75 percent over a five-year period, beginning with tax year 2014.  Fall all tax years beginning on or after 2018, the maximum tax rate for personal income would be 5.25 percent; the maximum tax rate on corporate income would be 5.5 percent for all tax years beginning on or after Jan. 1, 2018. 

Currently, there is a personal exemption of $2,100 for individual income taxes.  Senate Bill 26 would increase this exemption by $2,000 for Missourians with an adjusted gross income of less than $20,000. 

In addition, small businesses would be allowed to deduct 5 percent of business income for the 2013 tax year, and once fully phased in, would be allowed a 50 percent deduction for all tax years after the 2016 tax year.  The act exempts the first $25,000 of corporate income from taxation.

Also phased in over a five-year period, Senate Bill 26 would raise the state sales and use tax — a tax imposed on the purchase price of tangible personal property of taxable service sold at retail —from 4 to 4.5 percent. 

The legislation will also allow the collection of taxes on Internet sales.  If the federal government passes the Marketplace Fairness Act of 2013, a measure that would grant states the authority to compel online and catalog retailers to collect sales tax at the time of a transaction similar to brick and mortar businesses, or similar legislation, the maximum rate of tax on personal income would be reduced by an additional .25 percent.

If passed by the Missouri House and signed by the governor into law, Senate Bill 26 would take effect Jan. 1, 2014. 

To follow this and other bills filed for the 2013 legislative session, visit www.senate.mo.gov.