Missouri Senate

Perfected

RIGHT-TO-START ACT

By no later than June 30, 2024, and annually thereafter, this act requires the Commissioner of Administration to file a report with the General Assembly that includes information on contracts awarded to businesses that have been in operation for less than three years, as described in the act.

This act also requires the Commissioner of Administration, in conjunction with the Office of Entrepreneurship, which is established by the act, to file a report with the General Assembly making recommendations on improving access and resources for new Missouri businesses that have been in operation for less than three years, including minority-owned businesses. (Section 34.195)

This provision is identical to a provision contained in HCS/HB 1590 (2022).

TAXATION OF BUSINESSES

Current law allows a taxpayer to subtract a percentage of the taxpayer's business income from the taxpayer's federal adjusted gross income. This act allows a taxpayer that begins business operations on or after January 1, 2023, to reduce such taxpayer's remaining business income by a further twenty percent for the first three years in which the taxpayer's business is in operation. (Section 143.022)

Current law provides for a corporate income tax of 4%. For all tax years beginning on or after January 1, 2023, for corporations beginning operations in this state on or after January 1, 2023, this act reduces such rate of tax to 3% for the first $100,000 of income, with the corporation's remaining income to be taxed at 4%. Beginning with the fourth year in which the corporation maintains operations in this state, all of such corporation's income shall be taxed at 4%. (Section 143.071)

These provisions are identical to provisions contained in HCS/HB 1590 (2022).

S CORP TAX CREDIT

Current law authorizes a tax credit for the amount of income tax paid to another state for income that is also taxed in this state. This amendment allows such tax credit to be claimed by resident shareholders of an S corporation for the amount of tax imposed by this state on income earned in another state but not taxed by such state. (Section 143.081)

This provision is identical to SB 410 (2021) and to a provision contained in SB 931 (2022).

MEDICAL MARIJUANA BUSINESS DEDUCTION

This act allows taxpayers authorized under the Missouri Constitution to operate a business related to medical marijuana to claim an income tax deduction in an amount equal to any expenditures otherwise allowable as a federal income tax deduction, but that are disallowed for federal purposes because cannabis is a controlled substance under federal law. (Section 143.121)

This provision is identical to SB 436 (2021) and is substantially similar to HB 877 (2021) and to a provision contained in CCS/HCS/SB 226 (2021) and HCS/SS/SB 283 (2021).

SALT PARITY ACT

This amendment establishes the "SALT Parity Act".

Current law provides that, in lieu of a corporate income tax on a pass-through entity, shareholders of such pass-through entity shall pay income tax on the shareholder's pro rata share of the entity's income attributable to Missouri. For tax years beginning on or after January 1, 2023, this amendment allows the pass-through entity to elect to pay the tax, as described in the amendment. The tax shall be equal to the sum of each member's income and loss items, as described in federal law, reduced by a deduction allowed for qualified business income, as described in federal law, and modified by current provisions of state law relating to the taxation of pass-through entities, with such sum multiplied by the highest rate of tax in effect for the state personal income tax.

A nonresident who is a member, as defined in the amendment, shall not be required to file a tax return for a tax year if, for such tax year, the only income derived from this state for such member is from one or more affected business entities, as defined in the amendment, that has elected to pay the tax imposed under this amendment.

Each partnership and S corporation shall report to each of its members, for each tax year, the member's pro rata share of the tax imposed by this amendment.

Each taxpayer, including part-year residents, that is subject to the state personal income tax shall be allowed a tax credit if such taxpayer is a member of an affected business entity that elects to pay the tax imposed by this amendment. The tax credit shall be equal to the taxpayer's pro rata share of the tax paid under this amendment. Such tax credit shall be nonrefundable, but may be carried forward to subsequent tax years, except that a tax credit authorized for taxes paid to other states shall not be carried forward.

Each corporation that is subject to the state corporate income tax shall be allowed a tax credit if such corporation is a member of an affected business entity that elects to pay the tax imposed by this amendment. The tax credit shall be equal to the corporation's pro rata share of the tax paid under this amendment. Such tax credit shall be nonrefundable, but may be carried forward to subsequent tax years.

Partnerships and S corporations may elect to pay the tax imposed under this amendment by submitting a form to be provided by the Department of Revenue. A separate election shall be made for each tax year. Such election shall be signed either by each member of the electing entity, or by any officer, manager, or member of the electing entity who is authorized to make such election and who attests to having such authorization under penalty of perjury.

An affected business entity shall designate an affected business entity representative for the tax year to amendment on behalf of the affected business entity in any action required or permitted to be taken by an affected business entity pursuant to this amendment, a proceeding to protest taxes, an appeal to the Administrative Hearing Commission, or review by the judiciary with respect to such action, and the affected business entity's members shall be bound by those actions. (Section 143.436)

This provision is identical to SB 1154 (2022).

OFFICE OF ENTREPRENEURSHIP

This act creates the Office of Entrepreneurship within the Department of Economic Development. The Office shall employ an individual to promote policies and initiatives to support the growth of entrepreneurship, including minority entrepreneurship, in this state. (Section 620.3800)

This provision is identical to a provision contained in HCS/HB 1590 (2022).

JOSH NORBERG