New Missouri law cuts state income tax, with further cuts possible

Missouri Governor Mike Parson recently signed into law a law that lowers the state’s personal income tax rate.

The law, signed on October 5, 2022 and effective for the 2023 calendar year, reduces the top personal income tax rate from 5.2% to 4.95%. It also eliminates the lower income tax bracket, allowing Missourians to earn their first $1,000 tax-free. In addition, the law authorizes an additional reduction in the top tax rate from 0.15 percent to 4.8 percent when Missouri’s net general revenue increases by $175 million and a further reduction of 0.1 percent in the tax rate. higher taxation in future years when the state‘s net general revenue increases by $200. million. If Missouri income increases as noted above and the corresponding rate reductions take effect, the new legislation will reduce Missouri’s top tax rate to 4.5%.

Finally, the new law eliminates personal income tax for individuals earning less than $13,000 per year and for couples earning less than $26,000 per year. It does not contain any state-level corporate tax rate changes.

Previously, Missouri’s top tax rate was set to drop from 5.3% to 5.2% in January, with the potential to gradually drop to 4.8% if income thresholds are exceeded in future years. . Changes to Missouri tax rates do not affect federal taxes. A summary of the current federal rates for 2022 is below:

Tax rate

For single registrants

For married people filing jointly

For heads of families

ten%

$0 to $10,275

$0 to $20,550

$0 to $14,650

12%

$10,275 to $41,775

$20,550 to $83,550

$14,650 to $55,900

22%

$41,775 to $89,075

$83,550 to $178,150

$55,900 to $89,050

24%

$89,075 to $170,050

$178,150 to $340,100

$89,050 to $170,050

32%

$170,050 to $215,950

$340,100 to $431,900

$170,050 to $215,950

35%

$215,950 to $539,900

$431,900 to $647,850

$215,950 to $539,900

37%

$539,900 or more

$647,850 or more

$539,900 or more

The new legislation also provided for the creation and extension of certain agricultural tax credits. These tax credits are intended to help grow the state’s farming community.

A press release on the signing of the law is available at https://governor.mo.gov/press-releases/archive/governor-parson-signs-largest-income-tax-cut-state-history-law.

Comments are closed.