SCS/HCS/HB 2540 - This act modifies several provisions relating to individual income taxes.INDIVIDUAL INCOME TAX
Current law provides for a reduction in the top rate of income tax over a period of years from 6% to 5.5%, with each cut becoming effective if net general revenue collections meet a certain trigger. In addition to such reductions, beginning in the 2019 calendar year, this act provides that the top rate of tax shall be reduced by 0.4%. The Director of Revenue shall adjust the tax tables as provided in the act.
This act provides that when an income bracket is eliminated from the tax table, the top remaining tax rate shall apply to all income in excess of the second highest remaining income bracket.
This act also creates a definition for "net general revenue collected", which includes all revenue deposited into the general revenue fund, less refunds and revenues originally deposited into the general revenue fund but designated by law for a specific distribution or transfer to another state fund. (Section 143.011)
This provision is similar to a provision contained in CCS/SB 884 (2018) and HCS/SS#2/SB 674 (2018), and is substantially similar to a provision contained in SS#2/SCS/SBs 617, 611, & 667 (2018).
This act provides that Missouri personal and dependency exemptions shall not be allowed if the federal exemption amount is zero. (Sections 143.151 and 143.161)
This provision is identical to a provision contained in SS#2/SCS/SBs 617, 611, & 667 (2018) and is substantially similar to a provision contained in HCS/SS#2/SB 674 (2018), HCS/HB 1964 (2018), and HB 2472 (2018).
INCOME TAX DEDUCTIONS
Current law provides for an individual income tax deduction in the amount of 20% of a taxpayer's business income, which is phased in at 5% increments over a period of years if net general revenue collections meet a certain trigger. This act modifies such deduction by reducing the maximum deduction from 25% to 20%. (Section 143.022)
This provision is similar to a provision contained in HCS/SS#2/SB 674 (2018) and HCS/HB 1964 (2018).
For all tax years beginning on or after January 1, 2019, this act also modifies the income tax deduction for federal tax liability paid by indexing the amount that may be deducted to the taxpayer's Missouri adjusted gross income, as described in the act. The deduction is allowed at 35% for adjusted gross income of $25,000 or less, and is phased out to 0% for adjusted gross income of $125,001 or more. (Section 143.171)
This provision is substantially similar to HB 2691 (2018) and to a provision contained in SS#2/SCS/SBs 617, 611, & 667 (2018), and is similar to a provision contained in HB 1824 (2018) and HB 2734 (2018).
EFFECTIVE DATES
This act shall become effective on January 1, 2019. (Section B)
JOSHUA NORBERG