Missouri Governor Mike Parson signed a tax bill into law that primarily takes effect in 2019. Here are the highlights of the changes:
TAX CUT
- The top individual rate drops from 5.9% to 5.4% beginning in 2019
- The top rate can drop by 0.1% for each year that Missouri meets stated revenue targets – eventually dropping the maximum rate down to 5.1%
TAX INCREASE
- The deduction for Federal income taxes (currently a maximum of $5,000 single and $10,000 married) will phase out based on Missouri adjusted gross income beginning in 2019
- At $125,001 the deduction will be fully phased out
- The Missouri maximum business income deduction is reduced from 25% to 20%
- The deduction for business income (originally enacted in 2014) is being phased in over a period of years at 5% per year if certain revenue targets at met – under this new law, the maximum deduction will be 20% (rather than 25% as originally enacted)
- 2018 is the first year the deduction is available and it is a 5% deduction for 2018 and a 10% deduction for 2019 (Missouri met the revenue target in fiscal years 2017 and 2018)
- Personal and dependent exemptions are no longer allowed when a taxpayer’s federal exemption amount is zero beginning in 2019
- The Federal personal exemptions were reduced to zero by the Tax Cuts and Jobs Act of 2017 for the years 2018-2025