Missouri families battling record inflation will find some financial relief at tax time. Gov. Mike Parson signed legislation to cut personal income taxes in the state.
He also signed HB 3 into law, which includes the extension and creation of several agriculture tax credit programs intended to help develop key areas of Missouri’s agricultural industry, the state’s top economic driver.
“Missouri’s elected officials have been hard at work at the State Capitol to pass critical support for farmers and ranchers and the largest income tax cut in state history for all taxpaying Missourians,” he said. “This summer, we engaged stakeholders, representatives and senators. We went to them, met them where they were and formulated a concrete path ahead. Today, on the successful conclusion of our special session, we are proud to sign two historical pieces of legislation into law.”
The amount of tax cuts top 3/4 of a billion dollars. The cuts come on top of a $4.9 billion budget surplus for 2023. But, much of that surplus is from unspent covid funds. That’s why many states, while having surpluses, are hesitant to cut taxes because federal covid funds, amounting to billions for each state, won’t be around long. Missouri received a total of $11.44 billion in federal covid funds and spent only $8.9 leaving it with $2.85 in unspent covid funds. One in four Missouri small businesses closed permanently during Missouri’s lockdowns.
The changes include::
- Reducing the top individual income tax rate from 5.2 to 4.95 percent, resulting in the majority of taxpaying Missourians seeing an approximately 5 percent decrease in their tax liability;
- Eliminating the bottom income tax bracket, allowing Missourians to earn their first $1,000 tax-free;
- Eliminating income taxes for individuals making less than $13,000 a year and couples making less than $26,000; and
- Allowing three additional .1 percent top income tax rate reductions in future years when net general revenue increases by $200 million, adjusted for inflation.
- Allowing an additional .15 percent top income tax rate reduction to 4.8 percent when net general revenues increase by $175 million;
“Every Missourian can support sending less of their money to the government, and we trust Missourians to make decisions with their own money,” Parson said. “Throughout my career, I’ve committed to exploring every opportunity to reduce Missourians’ tax burden, and thanks to our strong financial position and balanced approach, the time is now. This historic tax cut means more money for Missourians to spend, invest and save. It means economic growth, business expansions and good-paying jobs for Missourians both today and tomorrow.”
The bill has its detractors, however, even among Republicans.
Republican Rep. Bill Kidd who represents eastern Jackson County, asked lawmakers to help low-income Missourians and those on fixed incomes in a different way in next year’s session.
“If you’re a low-bracket income earner, or you’re a fixed-income earner, this tax cut really isn’t going to do much for you at all. That’s the truth,” he said during floor discussion. “Please do something that will impact real people… If you are in the $100,000 to $200,000 range you are going to like this tax cut. But if you are a poor person or a person on a fixed income, this doesn’t do it.”
Supporters say that the cuts are not weighted to the lowest income residents because they already pay no, or very little taxes.
–Dwight Widaman | Metro Voice