BUSINESS INCOME DEDUCTION (143.013)

The act creates an individual income tax deduction for business income and phases it in over a period of years. Shareholders of S corporations and partners in partnerships will be allowed a proportional deduction based their share of ownership.

Beginning in 2014, if the net amount of income taxes collected in the previous fiscal year are equal to or exceed the net amount of income taxes collected in fiscal year 2012, the percentage of business income that taxpayers will be allowed to deduct for that calendar year will be increased by 10%. If the net amount of income taxes collected in the previous fiscal year do not exceed the amount collected in fiscal year 2012, the percentage of business income that may be deducted in that year will be the same as the previous year. The maximum amount of business income that may be deducted is 50%.

The phase in requirement shall not apply to taxpayers with an average payroll of 150% of the county average wage. Such taxpayers may deduct 50% of their business income beginning in 2014.

These provisions are similar to SB 496 (2014), HB 2213 (2014), SB 11 (2013), HB 536 (2013), and SB 661 (2012). These provisions are similar to provisions contained in HB 1254 (2014), HB 1295 (2014), HB 1453 (2014), HB 2073 (2014), HB 2290 (2014), SB 509 (2014), SB 858 (2014), and SS/HB 253 (2013).

CORPORATE INCOME TAX (143.071)

This act reduced the rate of tax on corporate income of a period of years. Beginning in 2014, if the net amount of income taxes collected in the previous fiscal year are equal to or exceed the net amount of income taxes collected in fiscal year 2012, the rate of tax on corporate income for that calendar year will be decreased by 5/8%. If the net amount of income taxes collected in the previous fiscal year do not exceed the amount collected in fiscal year 2012, the rate of tax on corporate income for that year will be the same as the previous year. The rate of tax on corporate income may not be reduced below 3 1/8%.

The phase in requirement shall not apply to corporations with an average payroll of 150% of the county average wage. Such corporations rate of tax will be 3 1/8% beginning in 2014.

This provision is similar to provisions contained in HB 1453 (2014).

EMPLOYER INCOME TAX WITHHOLDING (143.221)

Currently, an employer is allowed to file an annual withholding tax return instead of four quarterly returns when the aggregate amount withheld is less than $20 in each of the four preceding quarters. The act changes the amount to less than $100 in each of the four preceding quarters if the employer is not otherwise required to file a withholding return on a quarterly or monthly basis.

This provision is similar to HB 1224 (2014). This provision is similar to a provision in the perfected version of HB 1174 (2014), the perfected version of HCS/HB 1295 (2014), HB 2073 (2014), CCS/HCS/SB 584 (2014), and CCS/HCS/SS/SB 860 (2014).

FINANCIAL INSTITUTIONS TAX (148.720)

This act requires the rate of tax on financial institutions to be reduced to correspond to any reduction in the rate of tax on corporate income.

MIKE HAMMANN