BUSINESS INCOME DEDUCTION (Section 143.022)

The act creates an individual income tax deduction for business income and phases it in over a period of years, beginning in 2015. Each increase to the deduction amount will be by ten percent. Once fully phased-in, taxpayers will be allowed to deduct fifty percent of their business income. No increase to the deduction will go into effect unless the net general revenue collected in the previous fiscal year exceeded the amount of net general revenue in any one of the three fiscal years prior to such year by at least $150 million. Shareholders of S corporations and partners in partnerships will be allowed a proportional deduction based their share of ownership.

This provision is similar to a provision in HB 1453 (2014), HB 2073 (2014), HB 2290 (2014), SB 496 (2014), SB 509 (2014), SB 858 (2014), SB 11 (2013), SB 26 (2013), HB 536 (2013), and SB 661 (2012).

CORPORATE INCOME TAXES (Sections 143.071)

Currently, corporate income is taxed at a rate of 6.25%. This act reduces the rate of tax by 3% over a period of years, beginning in 2015. Each reduction to the rate will be by three-fifths of a percent. No reduction will go into effect unless the net general revenue collected in the previous fiscal year exceeded the amount of net general revenue in any one of the three fiscal years prior to such year by at least $150 million. Once fully phased in, the rate of tax on corporate income will be 3.25%.

EMPLOYER INCOME TAX WITHHOLDING (Section 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 (20140. This provision is similar to the perfected version of HB 1174 (2014), the perfected version of HCS/HB 1253 (2014), HB 2073 (2014), CCS/HCS/SB 584 (2014), and CCS/HCS/SS/SB 860 (2014).

MIKE HAMMANN