Income Tax Cut Approved by General Assembly

The Missouri House Budget Committee on Thursday approved a plan to cut the state’s income tax rate. In a 98-32 vote, the House sent the Senate-backed bill to Governor Mike Parson’s desk. This comes after the House chose to exclude a corporate tax break, when Parson signaled his opposition to the amendment. While democrats agreed with that change, it also killed other democrat-led amendments to the bill, including a tax credit for teachers. The plan that passed will lower the income tax rate from 5.3% to 4.95% in 2023. The rate could be reduced to 4.5%, if revenue growth is met. It will cost roughly $1 billion when fully implemented. The general revenue fund currently has a $5 billion surplus. Governor Parson called the bill “real relief for Missouri taxpayers”; however, the non-profit Missouri Budget Project said the tax break will largely benefit the wealthiest Missourians. The General Assembly returns to Jefferson City next week to finish debating agricultural tax credits, the second item on Governor Parson’s special session agenda.