Last week, Governor Eric Greitens (R-Mo.) rolled out an ambitious tax reform package aimed at creating jobs and providing tax relief for working Missourians. The reform would cut taxes for 97% of Missouri taxpayers and eliminate state income tax liabilities for 380,000 Missouri taxpayers. To offset most of the revenue reductions, business taxes and deductions are adjusted.
Under the plan, Missouri’s current top income tax rate of 5.9% is reduced to 5.3%, a 10% cut. The rate is paid by every Missouri taxpayer making at least $9,072 annually. The plan also enacts a statewide Earned Income Tax Credit (EITC) for Missouri taxpayers earning less than $150,000 annually. The Missouri EITC is a non-refundable tax credit against owed state income taxes equal to 20% of the federal EITC.
The business side of the reform plan takes the state corporate income tax from 6.25% down to 4.25%, moving Missouri from the middle of the pack to having the 2nd lowest corporate income tax out of the 44 states that levy the tax. In fact, Missouri would have a more competitive tax rate than every single state it borders, incentivizing businesses to invest in Missouri.
These three pieces of the reform plan are a $787 million tax cut for Missouri taxpayers, significantly improving the business climate and increasing take home pay for the average family. A married couple with two children earning $40,000 annually would receive a 51.24% tax cut, resulting in annual income increase of $471 under this plan.
To offset these decreases, a total of $748 million in business tax changes are implemented, including the elimination of timely filing discounts, Single Sale Factor apportionment, and a limit on federal tax deductions.
ATR applauds Governor Greiten’s proposal to provide significant tax relief for Missouri taxpayers and encourages the legislature to pass the plan.