Tax Cuts Coming to Missouri Residents and Small Businesses Owners in 2018
In 2014, I sponsored Senate Bill 509 to put more money back into the hands of the hardworking people who earned it. This legislation was specifically designed to help individuals who file taxes on an individual basis. That includes our thousands of small businesses — businesses owned by our neighbors, families and friends — that haven’t benefited from previous business tax reform. These are the businesses that employ up to 80 percent of Missouri workers.
Under the 2014 law, beginning in 2017, if net general revenue collected in the previous fiscal year exceeds the amount collected in any one of the three previous years by at least $150 million, personal income taxes will go down by one-tenth of 1 percent, while individual income taxes on the smallest business owners — those who pay taxes through their personal tax form — will decrease by 5 percent. To ensure the tax cuts only occur in years the state can afford them, the law included a trigger provision, which was recently met. This means a majority of Missouri residents and small business owners will see their tax bills go down in 2018.
The changes are to be implemented over a five-year period. Once fully phased in, the top tax rate on individual income will be 5.5 percent, and taxpayers will be able to deduct 25 percent of their business income. The legislation adds an additional $500 deduction for individuals who make less than $20,000, which took effect Jan. 1.
These tax reforms contain solid, built-in protections. For example, in the event of another economic downturn, the cuts will stop until revenue increases again. They were carefully crafted so that not only are Missouri taxpayers protected, but so too are those who rely on state funding. No one — and I mean no one — is looking to end up like Kansas.
Most importantly, these reforms will help improve Missouri’s tough budget situation by acting as economic drivers for our state and local economies, encouraging job growth and putting more money back into taxpayers’ pockets.
Fiscal Year 2017 collections were $9.016 billion, $229 million more than Fiscal Year 2016, an increase of 2.6 percent.
It’s been almost 100 years since we’ve seen a meaningful tax rate cut for individuals here in Missouri — this one will affect nearly every Missourian who files a personal tax return. Please know my office is available to answer any questions about the details of these important changes to our tax structure.
Join the conversation and follow me on Twitter @SenWillKraus. Please feel free to contact me with any questions or concerns at any time. We look forward to hearing your comments and suggestions and will try to answer any questions you may have. You can reach us by phone at (573) 751-1464, or email at Will.Kraus@Senate.Mo.Gov.
If you would like to be removed from the mailing list for this report, please reply to this email with “remove from list” in the subject line. Thank you.
Senator Will Kraus serves Eastern Jackson County in the 8th State Senatorial District.