EXPLANATION-Matter enclosed in bold-faced brackets [thus] in this bill is not enacted and is intended to be omitted in the law. FIRST EXTRAORDINARY SESSION [TRULY AGREED TO AND FINALLY PASSED ] SENATE SUBSTITUTE FOR SENATE COMMITTEE SUBSTITUTE FOR SENATE BILLS NOS. 3 & 5 101ST GENERAL ASSEMBLY 2022 5974S.05T AN ACT To repeal section 143.021, RSMo, and section 143.011 as enacted by senate bills nos. 153 & 97, one hundred first general assembly, first regular session, and to enact in lieu thereof two new sections relating to income taxes, with an effective date for a certain section. Be it enacted by the General Assembly of the State of Missouri, as follows: Section A. Section 143.021, RSMo, and section 143.011 as 1 enacted by senate bills nos. 153 & 97, one hundred first general 2 assembly, first regular session, are repealed and two new 3 sections enacted in lieu the reof, to be known as sections 4 143.011 and 143.021, to read as follows:5 143.011. 1. A tax is hereby imposed for every taxable 1 year on the Missouri taxable income of every resident. The 2 tax shall be determined by applying the tax table or the 3 rate provided in section 143.021, which is based upon the 4 following rates: 5 6 7 If the Missouri taxable income is: The tax is: 8 9 Not over $1,000.00 1 1/2% of the Missouri taxable income 10 11 Over $1,000 but not over $2,000 $15 plus 2% of excess over $1,000 SS SCS SBs 3 & 5 2 2. (1) [Beginning with the 2017 calendar year, the 28 top rate of tax under subsection 1 of this section may be 29 reduced over a period of years. Each reduction in the top 30 rate of tax shall be by one -tenth of a percent and no more 31 than one reduction shall occur in a calendar year. No more 32 than seven reduction s shall be made under this subsection. 33 Reductions in the rate of tax shall take effect on January 34 first of a calendar year and such reduced rates shall 35 continue in effect until the next reduction occurs. 36 (2) A reduction in the rate of tax shall o nly occur if 37 the amount of net general revenue collected in the previous 38 fiscal year exceeds the highest amount of net general 39 revenue collected in any of the three fiscal years prior to 40 12 13 Over $2,000 but not over $3,000 $35 plus 2 1/2% of excess over $2,000 14 15 Over $3,000 but not over $4,000 $60 plus 3% of excess over $3,000 16 17 Over $4,000 but not over $5,000 $90 plus 3 1/2% of excess over $4,000 18 19 Over $5,000 but not over $6,000 $125 plus 4% of excess over $5,000 20 21 Over $6,000 but not over $7,000 $165 plus 4 1/2% of excess over $6,000 22 23 Over $7,000 but not over $8,000 $210 plus 5% of excess over $7,000 24 25 Over $8,000 but not over $9,000 $260 plus 5 1/2% of excess over $8,000 26 27 Over $9,000 $315 plus 6% of excess over $9,000 SS SCS SBs 3 & 5 3 such fiscal year by at least one hundred fifty million 41 dollars. 42 (3) Any modification of tax rates under this 43 subsection shall only apply to tax years that begin on or 44 after a modification takes effect. 45 (4) The director of the department of revenue shall, 46 by rule, adjust the tax tables under subsection 1 of this 47 section to effectuate the provisions of this subsection. 48 The bracket for income subject to the top rate of tax shall 49 be eliminated once the top rate of tax has been reduced to 50 five and one-half percent, and the top remaining rate of tax 51 shall apply to all income in excess of the income in the 52 second highest remaining income bracket. 53 (5) Notwithstanding the provisions of subdivision (1) 54 of this subsection to the contrary, there shall be no 55 reduction under this subsection in the 2024 ca lendar year. 56 However, such reductions shall continue after the 2024 57 calendar year for subsequent calendar years. 58 3. (1) In addition to the rate reductions under 59 subsection 2 of this section, beginning with the 2019 60 calendar year, the top rate o f tax under subsection 1 of 61 this section shall be reduced by four -tenths of one 62 percent. Such reduction in the rate of tax shall take 63 effect on January first of the 2019 calendar year. 64 (2) The modification of tax rates under this 65 subsection shall only apply to tax years that begin on or 66 after the date the modification takes effect. 67 (3) The director of the department of revenue shall, 68 by rule, adjust the tax tables under subsection 1 of this 69 section to effectuate the provisions of this su bsection. 70 4. (1) In addition to the rate reductions under 71 subsections 2 and 3 of this section, beginning with the 2024 72 SS SCS SBs 3 & 5 4 calendar year, the top rate of tax under subsection 1 of 73 this section shall be reduced by one -tenth of one percent. 74 (2) The modification of tax rates under this 75 subsection shall apply only to tax years that begin on or 76 after the date the modification takes effect. 77 (3) The director of the department of revenue shall, 78 by rule, adjust the tax tables under subsection 1 of this 79 section to effectuate the provisions of this subsection. ] 80 Notwithstanding the provisions of subsection 1 of this 81 section to the contrary, beginning with the 2023 calendar 82 year, the top rate of tax pursuant to subsection 1 of this 83 section shall be four and ninety-five hundredths percent. 84 (2) The modification of tax rates made pursuant to 85 this subsection shall apply only to tax years that begin on 86 or after January 1, 2023. 87 (3) The director of the department of revenue shall, 88 by rule, adjust the tax table provided in subsection 1 of 89 this section to effectuate the provisions of this 90 subsection. The top remaining rate of tax shall apply to 91 all income in excess of seven thousand dollars, as adjusted 92 pursuant to subsection 5 of this section. 93 3. (1) In addition to the rate reduction under 94 subsection 2 of this section, beginning with the 2024 95 calendar year, the top rate of tax under subsection 1 of 96 this section may be reduced by fifteen hundredths of a 97 percent. A reduction in the rate of tax shall take effect 98 on January first of a calendar year and such reduced rates 99 shall continue in effect until the next reduction occurs. 100 (2) A reduction in the rate of tax shall only occur if 101 the amount of net general revenue coll ected in the previous 102 fiscal year exceeds the highest amount of net general 103 revenue collected in any of the three fiscal years prior to 104 SS SCS SBs 3 & 5 5 such fiscal year by at least one hundred seventy -five 105 million dollars. 106 (3) Any modification of tax rates under this 107 subsection shall only apply to tax years that begin on or 108 after a modification takes effect. 109 (4) The director of the department of revenue shall, 110 by rule, adjust the tax tables under subsection 1 of this 111 section to effectuate the provisions of this subsection. 112 4. (1) In addition to the rate reductions under 113 subsections 2 and 3 of this section, beginning with the 114 calendar year immediately following the calendar year in 115 which a reduction is made pursuant to subsection 3 of this 116 section, the top rate of tax under subsection 1 of this 117 section may be further reduced over a period of years. Each 118 reduction in the top rate of tax shall be by one -tenth of a 119 percent and no more than one reduction shall occur in a 120 calendar year. No more than three reductions shall be made 121 under this subsection. Reductions in the rate of tax shall 122 take effect on January first of a calendar year and such 123 reduced rates shall continue in effect until the next 124 reduction occurs. 125 (2) (a) A reduction in the rate of tax shall only 126 occur if: 127 a. The amount of net general revenue collected in the 128 previous fiscal year exceeds the highest amount of net 129 general revenue collected in any of the three fiscal years 130 prior to such fiscal year by at least two hundred million 131 dollars; and 132 b. The amount of net general revenue collected in the 133 previous fiscal year exceeds the amount of net general 134 revenue collected in the fiscal year five years prior, 135 SS SCS SBs 3 & 5 6 adjusted annually by the percentage increase in inflation 136 over the preceding five fiscal years. 137 (b) The amount of net general revenue collected 138 required by subparagraph a of paragraph (a) of this 139 subdivision in order to make a reduction pursuant to this 140 subsection shall be adjusted annually by the percent 141 increase in inflation beginning with the effective date of 142 this section. 143 (3) Any modification of tax rates under this 144 subsection shall only apply to tax years that begin on or 145 after a modification takes effect. 146 (4) The director of the department of revenue shall, 147 by rule, adjust the tax tables under subsection 1 of this 148 section to effectuate the provisions of this subsection. 149 The bracket for income subject to the top rate of tax shall 150 be eliminated once the top rate of tax has been reduced 151 below the rate applicable to such bracket, and the top 152 remaining rate of tax shall apply to all income in excess of 153 the income in the second highest remaining income bracket. 154 5. Beginning with the 2017 calendar year, the brackets 155 of Missouri taxable income identified in subsection 1 of 156 this section shall be adjusted annually by the percent 157 increase in inflation. The director shall publish such 158 brackets annually beginning on or after October 1, 2016. 159 Modifications to the brac kets shall take effect on January 160 first of each calendar year and shall apply to tax years 161 beginning on or after the effective date of the new brackets. 162 6. As used in this section, the following terms mean: 163 (1) "CPI", the Consumer Price Index for All Urban 164 Consumers for the United States as reported by the Bureau of 165 Labor Statistics, or its successor index; 166 SS SCS SBs 3 & 5 7 (2) "CPI for the preceding calendar year", the average 167 of the CPI as of the close of the twelve month period ending 168 on August thirty-first of such calendar year; 169 (3) "Net general revenue collected", all revenue 170 deposited into the general revenue fund, less refunds and 171 revenues originally deposited into the general revenue fund 172 but designated by law for a specific distribut ion or 173 transfer to another state fund; 174 (4) "Percent increase in inflation", the percentage, 175 if any, by which the CPI for the preceding calendar year 176 exceeds the CPI for the year beginning September 1, 2014, 177 and ending August 31, 2015. 178 143.021. 1. Every resident having a taxable income 1 shall determine his or her tax from the rates provided in 2 section 143.011. For all tax years beginning on or before 3 December 31, 2022, there shall be no tax on a taxable income 4 of less than one hundred dollars. 5 2. (1) Notwithstanding the provisions of subsection 1 6 of section 143.011 to the contrary, for all tax years 7 beginning on or after January 1, 2023, there shall be no tax 8 on taxable income of less than or equal to one thousand 9 dollars, as adjusted pursuant to subsection 5 of section 10 143.011. 11 (2) The modifications made pursuant to this subsection 12 shall only apply to tax years that begin on or after January 13 1, 2023. 14 (3) The director of the department of revenue shall, 15 by rule, adjust the tax table provided in subsection 1 of 16 section 143.011 to effectuate the provisions of this 17 subsection. 18 SS SCS SBs 3 & 5 8 Section B. The repeal and reenactment of section 1 143.011 of this act shall become effective on January 1, 2 2023. 3