In an ongoing attempt to make our state as military friendly as possible, I have co-filed Senate Bill 814 with Sen. Wayne Wallingford, R-Cape Girardeau, to help military families keep more of their take-home pay while stationed in Missouri. Currently, there is quite a bit of disparity in same-grade military pay, depending upon the state service members legally recognize as their home, and those who call Missouri home are currently at a disadvantage. To remedy this situation, the legislation would declare that any taxable military income received while engaging in the performance of active military duty may be deducted from that person’s Missouri adjusted gross income. If filing a combined return with a spouse, taxable military income may be deducted from their Missouri combined adjusted gross income.

This legislation will exempt the 14,300 Missouri residents stationed inside Missouri from state income tax. The average estimated impact for those serving part-time is $538; and for those serving full-time is $1,080. 

Six of Missouri’s eight neighboring states already exempt their residents from paying state income tax, regardless of where they are stationed. This policy was adopted by four of these states just within the past four years, proving that it is reasonable, and creating an urgency to catch up in order to remain competitive with these neighboring states.

There are unique after-tax pay dynamics that apply to military pay, which account for the absence of a level playing field between some states, relative to military take-home pay. Under the Service Members Civil Relief Act, military personnel are subject to certain tax filing provisions that determine their tax filing status. As they relocate for new assignments, their states of residence don’t change. One wrinkle in current policy provides that the state in which military member serve cannot tax their military income unless it also happens to be their state of residence. However, service members may change their state of residence if they have established a physical presence outside of their original state of residence.

Presently, Missouri only provides a state income tax exemption for military pay earned outside of Missouri. To illustrate what this means for Missouri versus Illinois military residents who both work at a base in Missouri, the Missouri resident will bring home about 3 percent less pay. My legislation, if passed, will eliminate that gap.

Without a doubt, this legislation is the right thing to do for our service men and women. It is also the right thing to do for the state of Missouri, as our neighboring states have created an uneven playing field, which makes it more attractive for service members to reside in other states. The economic factors associated with losing residents – namely the property and consumption tax revenue they will take with them – essentially nullifies the loss of income tax revenue derived from our service members.

As always, please feel free to contact me or my staff with any questions or concerns at any time. We look forward to hearing your comments and suggestions and trying to answer any questions you may have. You can reach us by phone at (866) 277-0882 (toll-free) or (573) 751-2272, or by fax at (573) 526-7381.