For the first time in almost a century, Missouri is beginning a phase-in of tax cuts from legislation passed in 2014. Senate Bill 509 provides for a minimum 5 year phase-in beginning in 2017 with increasing tax cuts only if the amount of net general revenue collected by the State exceeds previous year collections by $150 million.
This month Missouri announced a 2017 increase in general revenue collections of $230 million from 2016 to allow the following tax breaks beginning January 1, 2018:
- 5.9% Missouri top individual income tax rate (from 6.0%).
- 5% deduction from Missouri taxable income for business income sourced to Missouri, including income from Sole Proprietors, Partnerships, and S Corporations, to the extent income was included in federal adjusted gross income of the individual taxpayer.
While the above reductions are small, it is the beginning of what could be significant tax savings on Missouri income for individuals. If additional revenue increases are met, the phase-in for additional tax reductions would be:
- A decrease of one-tenth of a percent per year on Missouri individual income tax rates is not to be reduced below 5.5%.
- A deduction of business income increased by 5% per year, up to 25%, of Missouri sourced business income.
We hope you find this information valuable. As always, we are here to help. If you have any questions or would like a more in-depth explanation of these changes and how they directly impact you or your business, please give us a call to discuss.