JEFFERSON CITY — This week, Sen. David Pearce, R-Warrensburg, pre-filed Senate Bill 814, legislation he is co-sponsoring with Sen. Wayne Wallingford, R-Cape Girardeau, which will help military families keep more of their take-home pay while stationed in Missouri.  If passed, the bill would make any taxable military income received while engaging in the performance of active military duty deductible 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 would impact the 14,300 Missouri service members stationed in Missouri by exempting them from state income tax,” said Sen. Pearce.  “The average estimated savings for those serving part-time is $538, and $1080 for those serving full-time.  Many of our neighboring states have already made themselves more military friendly, and are already providing this benefit.  It’s time Missouri caught up.”

Six of Missouri’s eight neighboring states already exempt their residents from paying state income tax, regardless of where they are stationed, including Iowa, Illinois, Tennessee, Kentucky, Arkansas and Oklahoma.  This policy was adopted by four of these states just within the past four years, creating an urgency to level the playing field and remain competitive with our neighboring states.

“Not only is this legislation the right thing to do for our service men and women, it is also the right thing to do for our state,” said Sen. Pearce.

There are unique after-tax pay dynamics that apply to military pay, which create disparity among 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.  Current policy provides that the state a military member serves in 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.  Senate Bill 814, if passed, will eliminate that gap.