A Tax Cut for All Missourians

This week, the Missouri Senate brought the extra legislative session to a close, passing nearly $40 million dollars’ worth of incentives to support farmers and other agricultural producers. Earlier in the session, the General Assembly approved the largest income tax reduction in state history, potentially saving Missouri taxpayers nearly $1 billion by the time the legislation is fully implemented. Passage of the two measures completes the work the governor put before the General Assembly when he called us back to the State Capitol in September.

House Bill 3, passed this week, closely mirrors an earlier agriculture support measure, House Bill 1720, which the Legislature approved in May but the governor vetoed. The new bill contains nearly all the same tax credits for small farms, timber industries, meat processors, bio-fuel producers and other segments of Missouri’s agricultural economy, but the incentives will remain in effect for six years, replacing the two-year expirations contained in the original bill. Revising the sunsets addressed the governor’s objection to the agriculture bill we passed earlier this year.

The agriculture bill renews tax credits to encourage investment in new generation cooperatives and the production of specialty crops. Both programs are administered by the Missouri Agriculture and Small Business Development Authority (MASBDA), but authority for the program lapsed in December 2021. Passage of SB 3 will allow these important programs to continue. Also included in the bill were incentives to convert sawdust and other waste material from timber production into energy, and also extend tax credits to support expansion of meat processing facilities. In addition, the bill expands eligibility for participation in the “Family Farms Act,” allowing more Missourians to take advantage of lending programs intended to help establish and grown small family-owned farms. Newly enacted this year are incentives to encourage the production and sale of bio-fuels, specifically ethanol and biodiesel, which I sponsored during 2022’s regular legislative session, and in years prior.

The House bill we approved this week closely matches agricultural incentives legislation I filed during the extra session, Senate Bill 19. Both measures include provisions identical, or nearly so, to proposals contained in Senate Bill 655 and Senate Bill 866, which I filed during the 2022 regular session. The legislation approved this week also includes provisions I had amended onto a parallel Senate bill to streamline regulations of logging trucks, clarify provisions relating to land surveys and improve oversight of anhydrous ammonia distributors. I was especially gratified to see the new ethanol and biodiesel tax credits included in the bill. I’ve fought for these incentives for several years now and I’m glad to see these provisions cross the legislative finish line.

While the incentives contained in HB 3 will help grow our state’s largest economic sector, agriculture, all wage earners in Missouri will benefit from the income tax cuts we enacted. As a member of the Senate Appropriations Committee, I was involved in advancing what is being described as the largest income tax cut in Missouri history. Senate Bill 3 reduces Missouri’s top state individual income tax rate from its current level of 5.3% down to 4.95%, beginning in 2023. The bill also includes a series of automatic triggers to cut our income tax even further when general revenue grows. If Missouri’s economy continues to do well, and revenues to the state keep rising, your taxes will continue to fall. If all the triggers are reached, the top income tax rate will decrease to 4.5%.

The cuts anticipated by this legislation continues a long-term effort to reduce Missourians’ tax burden that began in 2015, when the top state income tax rate stood at 6%. Once the provisions of SB 3 are fully implemented, we will have cut Missouri’s individual income tax rate by 25% over the course of a decade. With inflation running rampant and an increasing share of hardworking families’ income being spent on everyday necessities such as a food and fuel, a tax cut couldn’t come at a better time. An analysis by the Office of Administration’s Budget and Planning Division estimates the new law would save Missouri taxpayers more than $300 million in 2023, and possibly as much as $1 billion by the time it’s fully implemented.

The legislation we passed during this year’s extra legislative session will bring real benefits to all Missourians, and I’m proud of the work we did this fall. I am disappointed we didn’t do more, and take up other legislation I introduced to grow Missouri’s economy and provide relief to taxpayers. Senate Bill 18 would have increased the standard deduction every taxpayer is entitled to claim on their Missouri individual tax return. It also would have eliminated the corporate income tax. It’s my belief businesses pass their tax burden onto consumers, so corporate income taxes are merely an individual tax in disguise. In my opinion, eliminating the corporate tax would attract new business to Missouri and help grow the state’s economy. Unfortunately, this proposal did not receive consideration during the session.

Two other measures I introduced during the extra session were outside the governor’s call, but I still felt it was critical to keep the issues before the Legislature. My Senate Bill 20 would have established the “Save Women’s Sports Act,” preventing biological males from participating in interscholastic or intramural athletic competitions intended for biological females. I also introduced Senate Bill 21 to prohibit the teaching of divisive concepts relating to race or sex in Missouri’s classrooms. Although the Legislature didn’t take up these bills during the extra session, I am determined to reintroduce them when the 102nd General Assembly convenes in January.

As always, I appreciate hearing your comments, opinions and concerns. Please feel free to contact me in Jefferson City at 573-751-4302. You may also email me at denny.hoskins@senate.mo.gov.