On May 6, the Missouri Legislature voted 109-46 to override Gov. Jay Nixon’s income tax cut veto. The override, which also passed the Senate on Monday, provides Missourians the first state income tax cut in nearly 100 years.
Below are highlights of the legislation, Senate Bill 509:
- Beginning in 2017, the bill will cut the state’s maximum personal income tax rate from 6% to 5.5% in five annual steps.
- The bill will provide a new 25% deduction for business income reported on individual returns, phased over a period of years beginning in 2017.
- Personal exemptions will increase by $500 for low-income taxpayers.
The cuts will take effect only if the state general revenue grows by at least $150 million a year compared to the highest state revenue point of the previous three years.
What do you need to know?
- Businesses: These tax cuts will impact your balance sheet and cash flow differently based on how you are doing business—as an S Corporation, C Corporation or Partnership.
- Individuals: Tax planning will become even more important as these cuts could impact your pocketbook differently from year to year; the cuts only go into effect if general revenue grows by $150 million or more.