Missourians to see individual income tax cut under new law
JEFFERSON CITY —
Missouri Gov. Mike Parson has signed legislation that his office says will cut the state's top individual income tax rate to 5.4 percent next year.
The Republican signed the bill Thursday.
It will take effect on the heels of earlier tax cuts passed by Missouri's Republican-led Legislature. A 2014 law enacted gradual cuts based on state revenue growth.
State Treasurer Eric Schmitt this week confirmed that revenue growth will trigger a cut from the current 5.9 percent rate down to 5.8 percent in January because of the earlier law. That covers the top tax bracket, which applies to most Missourians.
On top of that, the new law Parson signed will bring the rate down 0.4 percent, to 5.4 percent. Using the Department of Revenue's tax calculation worksheet, a family making $50,000 per year would save $204.64 on their 2019 taxes. The rate could drop to as low as 5.1 percent by 2023 depending on state revenue growth, which would mean a savings of $327.42 for a family making $50,000.
Those calculations don't take into effect changes to the federal income tax deduction which were part of the law Parson signed. Drafted by lawmakers in response to the 2017 federal tax cut, the changes do away with the maximum deduction of $5,000 for individual filers and $10,000 for joint filers. Instead, taxpayers' federal income tax deduction will be based on their income. Anyone making $25,000 a year or less would be eligible for a 35 percent deduction, while income over $125,000 would not be eligible for any deduction. When lawmakers were finalizing the bill in May, a local CPA told KRCG 13 this could offset any savings from changes to the income tax rate.