COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:2555H.01I Bill No.:HB 1366 Subject:Taxation and Revenue - General; Motor Fuel; Taxation and Revenue - Sales and
Use; Tax Incentives; Transportation; Revenue, Department of
Type:Original Date:March 8, 2023Bill Summary:This proposal modifies provisions relating to motor fuel tax exemption.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2027)
Total Estimated
Net Effect on
General
Revenue $0$0$0$0
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2027)
State Road
Fund*
($83,173,290 to
$95,481,323)
($106,448,409 to
$110,551,086)
($153,682,796 to
$157,785,474)$177,128,952)
Total Estimated
Net Effect on
Other State
Funds
($83,173,290
to
$95,481,323)
($106,448,409 to
$110,551,086)
($153,682,796 to
$157,785,474)
$177,128,952)
*Part of the fiscal impact in FYs 2024 – 2026 is due to timing of when motor fuel tax refunds are
processed. This proposal changes the motor fuel tax refunds from a fiscal year basis to a calendar
year basis, pushing forward into a different fiscal year some of the refund requests. Fiscal
impact is also affected by including a standard refund option vs. only an itemized refund option
(current law) which is assumed to increase the number of refunds.
Numbers within parentheses: () indicate costs or losses. L.R. No. 2555H.01I
Bill No. HB 1366
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2027)
Total Estimated
Net Effect on
All Federal
Funds $0$0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2027)
Total Estimated
Net Effect on
FTE 000$0
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY 2027)
Local
Government
($30,762,724 to
$35,315,010)
($39,371,329 to
$40,888,758)
($56,841,582 to
$58,359,011)$65,513,448) L.R. No. 2555H.01I
Bill No. HB 1366
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March 8, 2023
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FISCAL ANALYSIS
ASSUMPTION
Officials from the Office of Administration - Budget and Planning (B&P) assume the
following regarding this proposal:
This proposal would allow individuals to either claim an itemized (receipts required) or standard
(no receipts required) motor fuel tax rebate refund. B&P notes that individuals cannot claim
both and the total amount of refunds granted cannot exceed the amount of revenues generated
under Section 142.803. In addition, all refund claims must be paid from the motor fuel tax fund
that receives collections under Section 142.803.
Itemized Motor Fuel Refunds
This proposal would change the timing for motor fuel tax refund claims for the additional fuel
tax passed in SB 262 (2021). Currently, motor fuel tax refund claims must be made on a fiscal
year basis (July through June motor fuel tax purchases) and refund claims must be made between
July 1 and September 30 of the following fiscal year.
This proposal would change the refund claims to tax year (January through December) with
claims to be made from January 15 through April 15 of the tax year following the year in which
the motor fuel purchases were made. Table 1 shows the change in the refund due date depending
on when the motor fuel is purchased. L.R. No. 2555H.01I
Bill No. HB 1366
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March 8, 2023
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Table 1: Timing of Refund ClaimsCurrent Refund TimingProposed Refund Timing
Date of Purchase
Fuel
Tax
Rate
Date
Fiscal
YearDate
Fiscal
Year
10/2021 - 12/2021$0.025 7/2022 - 9/2022FY 20237/2022 - 9/2022FY 20231/2022 - 6/2022$0.025 7/2022 - 9/2022FY 20237/2022 - 9/2022FY 20237/2022 - 12/2022$0.050 7/2023 - 9/2023FY 20241/2023 - 4/2023FY 20241/2023 - 6/2023$0.050 7/2023 - 9/2023FY 20247/2023 - 9/2023FY 20247/2023 - 12/2023$0.075 7/2024 - 9/2024FY 20251/2024 - 4/2024FY 20241/2024 - 6/2024$0.075 7/2024 - 9/2024FY 20251/2025 - 4/2025FY 20257/2024 - 12/2024$0.100 7/2025 - 9/2025FY 20261/2025 - 4/2025FY 20251/2025 - 6/2025$0.100 7/2025 - 9/2025FY 20261/2026 - 4/2026FY 20267/2025 - 12/2025$0.125 7/2026 - 9/2026FY 20271/2026 - 4/2026FY 20261/2026 - 6/2026$0.125 7/2026 - 9/2026FY 20271/2027 - 4/2027FY 20277/2026 - 12/2026$0.125 7/2027 - 9/2027FY 20281/2027 - 4/2027FY 2027
B&P notes that this part of the proposal would not change the number of taxpayers that qualify
for the motor fuel tax refund, only the timing of the refund claims. Therefore, this proposal will
not result in additional gains or losses beyond those already estimated in the TAFP fiscal note for
SB 262 (2021).
The first round of refund claims were received between July 2023 and September 2023. B&P
notes that the $0.025 increase in the fuel tax during FY 2022 generated refund claims of
$423,947. Using the number of gallons sold, B&P estimates that the additional tax generated
$70,621,251 in additional motor fuel revenue. Therefore, B&P estimates that highway use
refund claims were approximately 0.6% ($423,947 / $70,621,251) of the additional fuel tax
revenue.
However, as the fuel tax increases over the remaining years, it is likely that fuel tax refunds will
also increase. Therefore, based on this new information, B&P has updated the refund estimates
for SB 262 (2021). B&P will show refund claims ranging between 0.6% and 15% of the
additional revenue generated. L.R. No. 2555H.01I
Bill No. HB 1366
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March 8, 2023
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While this proposal will not increase the overall number of refunds, this proposal will have a
cash flow impact in FY 2024 through FY 2026 for all state and local fuel tax funds by moving
some motor fuel refund claims into an earlier fiscal year. Using updated refund estimates for SB
252 (2021), B&P estimates that this proposal could increase refunds by $702,893 to $17,563,213
in FY 2024, depending on the number of qualifying taxpayers that make refund claims. In FY
2025 and FY 2026, refund claims may increase by $234,298 to $5,854,404 each year. There will
no longer be a cash flow impact by FY 2027. Table 2 shows the estimated impacts by fund.
Table 2: Estimated Cash Flow Impact from Refund Claim Due Date Timing FY 2024FY 2025FY 2026State FundLowHighLowHighLowHighState Road
Fund($513,112)($12,821,146)($171,037)($4,273,715)($171,037)($4,273,715)
Local Funds CART($84,347)($2,107,586)($28,116)($702,529)($28,116)($702,529)Other($105,434)($2,634,482)($35,145)($878,161)($35,145)($878,161)Total Local($189,781)($4,742,068)($63,261)($1,580,690)($63,261)($1,580,690)
Standard Income Tax Refunds
This proposal would allow taxpayers to take a standard refund, rather than the itemized receipt
required rebate, beginning with tax year 2023. The standard refund would be claimed at the time
an individual files their annual tax return. Table 3 shows the amounts of the standard refund by
tax year.
Table 3: Standard
Refund Amount
Tax YearRefund2023$35 2024$45 2025$65 2026$75 L.R. No. 2555H.01I
Bill No. HB 1366
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B&P notes that in tax year 2020, there were 3,250,763 Missouri individual income tax returns
filed. Assuming that individuals who currently itemize their fuel tax returns continue to do so,
B&P estimates that the standard refund may be claimed on 3,235,232 (3,250,763 income tax
returns – 15,531 itemized returns). Table 4 shows the estimated income tax claims per year.
Table 4: Income Tax Claims
by Year
Tax
Year
Fiscal
YearRefund Claim
20232024$113,233,120 20242025$145,585,440 20252026$210,290,080 20262027$242,642,400
Summary
B&P estimates that this proposal could increase refunds from the State Road Fund by
$83,173,290 to $95,481,323 in FY 2024, depending on the number of qualifying taxpayers that
make refund claims. Once SB 262 (2021) fully implements, this proposal could increase refund
claims from the State Road Fund by $65,513,448. L.R. No. 2555H.01I
Bill No. HB 1366
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Table 5: Standard and Itemized Refund Impact FY 2024FY 2025State FundLowHighLowHighState Road Fund Standard Refund($82,660,178)($106,277,371)Itemized Rebate($513,112)($12,821,146)($171,037)($4,273,715)Total State Road Fund($83,173,290)($95,481,323)($106,448,409)($110,551,086) Local Funds CART Standard Refund($13,587,974)($17,470,253)Itemized Rebate($84,347)($2,107,586)($28,116)($702,529)Total CART($13,672,322)($15,695,560)($17,498,369)($18,172,781) Other Fuel Funds Standard Refund($16,984,968)($21,837,816)Itemized Rebate($105,434)($2,634,482)($35,145)($878,161)Total Other Local($17,090,402)($19,619,450)($21,872,961)($22,715,977) Total Local($30,762,724)($35,315,010)($39,371,329)($40,888,758) L.R. No. 2555H.01I
Bill No. HB 1366
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Table 5: Standard and Itemized Refund Impact FY 2026FY 2027State FundLowHighLowHighState Road Fund Standard Refund($153,511,758)($177,128,952)Itemized Rebate($171,037)($4,273,715)$0 $0 Total State Road Fund($153,682,796)($157,785,474)($177,128,952)($177,128,952) Local Funds CART Standard Refund($25,234,810)($29,117,088)Itemized Rebate($28,116)($702,529)$0 $0 Total CART($25,262,925)($25,937,338)($29,117,088)($29,117,088) Other Fuel Funds Standard Refund($31,543,512)($36,396,360)Itemized Rebate($35,145)($878,161)$0 $0 Total Other Local($31,578,657)($32,421,673)($36,396,360)($36,396,360) Total Local($56,841,582)($58,359,011)($65,513,448)($65,513,448) L.R. No. 2555H.01I
Bill No. HB 1366
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Officials from the Department of Revenue (DOR) assume the following regarding this
proposal:
Section 142.822 Motor Fuel Refund Period Change
SB 262 adopted in 2021, created a provision that would increase the motor fuel tax rate over a
period of five years. At the time, motor fuel (gasoline and diesel) were taxed at $0.17 per gallon.
SB 262 would allow the motor fuel rate to increase each year on July 1st until the highest rate of
$0.295 was reached. At that time the motor fuel rate would remain $0.295 into the future.
The rate is currently increasing as follows:
FY Tax RateRefund Can Be
Claimed (July to
Sept)
Tax IncreaseTotal Motor Fuel TaxFY 2022FY 2023$0.025$0.195FY 2023FY 2024$0.05$0.220FY 2024FY 2025$0.075$0.245FY 2025FY 2026$0.1$0.270FY 2026+FY 2027+$0.125$0.295
SB 262 also contained a provision that created a refund program for highway users who did not
want to pay the increased motor fuel rate. While they would still be required to pay the tax at the
fuel pump, they could request from DOR that the increased amount be refunded to them. The
refund period was established starting July 1- Sept 30th of the following fiscal year. Since the
rate hike is for the full fiscal year (July to June) the refund period also covered that same fiscal
year. In order to receive the refund a taxpayer completes a form with the statutorily required
information and the extra motor fuel tax is refunded.
This proposal changes the refund period. Instead of claiming the credit from July to September
after the fiscal year ends, this proposal moves the refund period to January 1st to April 15th of
each year. Filing at this time of year, will result in refund claim forms having two separate
motor fuel rates on them. This will start on January 1, 2024. L.R. No. 2555H.01I
Bill No. HB 1366
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Timing of Refund ClaimsCurrent Refund TimingProposed Refund Timing
Date of Purchase
Fuel
Tax
Rate
Date
Fiscal
YearDateFiscal Year
10/2021 - 12/2021$0.025 7/2022 - 9/2022FY 20237/2022 - 9/2022FY 20231/2022 - 6/2022$0.025 7/2022 - 9/2022FY 20237/2022 - 9/2022FY 20237/2022 - 12/2022$0.050 7/2023 - 9/2023FY 20241/2023 - 4/2023FY 20241/2023 - 6/2023$0.050 7/2023 - 9/2023FY 20247/2023 - 9/2023FY 20247/2023 - 12/2023$0.075 7/2024 - 9/2024FY 20251/2024 - 4/2024FY 20241/2024 - 6/2024$0.075 7/2024 - 9/2024FY 20251/2025 4/2025FY 20257/2024 - 12/2024$0.100 7/2025 - 9/2025FY 20261/2025 - 4/2025FY 20251/2025 - 6/2025$0.100 7/2025 - 9/2025FY 20261/2026 - 4/2026FY 20267/2025 - 12/2025$0.125 7/2026 - 9/2026FY 20271/2026 - 4/2026FY 20261/2026 - 6/2026$0.125 7/2026 - 9/2026FY 20271/2027 - 4/2027FY 20277/2026 - 12/2026$0.125 7/2027 - 9/2027FY 20281/2027 - 4/2027FY 2027
This part of the proposal will not result in any additional gains or losses to the motor fuel funds
than what was projected in SB 262. It changes the timing of the refunds and not who or how
many taxpayers may qualify for the refund. How much of the refunds will now shift to another
fiscal year (refund period) is shown below.
DOR notes that the first refund period was completed from July 2023 to September 2023 for the
increase that occurred from October 1, 2022 to June 30, 2023. That increase was $0.025 and so
it will not be impacted. DOR records indicate $423,947 in refunds were claimed, while
receiving an additional $70,621,241 from the increased motor fuel rate. Therefore, DOR
refunded approximately 0.6% ($423,947/$70,621,251) of the additional revenue.
DOR had done revenue estimates for SB 262, that were updated using the FY 2022 motor fuel
gallons sold data for this fiscal note. Additionally, for SB 262 DOR had assumed a low range of
refunds at 15% (based on another state with a similar program). DOR assumes that given the
increasing price of the fuel tax and current economic conditions, more than the 0.6% refunds
currently requested could be received in the upcoming fiscal years. For this fiscal note DOR is
showing the refund claims ranging from the current 0.6% to the 15% under SB 262 for the shift
in the refund period. L.R. No. 2555H.01I
Bill No. HB 1366
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March 8, 2023
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Estimated Cash Flow Impact from Refund Claim Due Date Timing FY 2024FY 2025FY 2026State FundLowHighLowHighLowHighState Road Fund($513,112)($12,821,146)($171,037)($4,273,715)($171,037)($4,273,715) Local Funds CART($84,347)($2,107,586)($28,116)($702,529)($28,116)($702,529)Other($105,434)($2,634,482)($35,145)($878,161)($35,145)($878,161)Total Local($189,781)($4,742,068)($63,260)($1,580,689)($63,260)($1,580,689)
This proposal will result in the Department needing to change its forms and its computer
program to accept more than one tax rate at a time. This is estimated to cost $10,000. Having
more than one motor fuel rate on the refund claim form may slow down the processing of the
forms. DOR needs one Associate Customer Service Representative ($32,100) for every 6,000
claims processed at a single rate per year. Additionally, its records indicate the average time to
process a refund request was 19 days. If it is determined that additional FTE are needed to help
process the refunds, DOR will seek those through the appropriation process.
Currently, taxpayers are allowed to submit these forms electronically or mailed on paper. Should
they be mailed to DOR separate than their tax return, DOR assumes no additional impact.
However, if a taxpayer mails their claim form with their individual income tax return, this could
slow down the processing of the returns and require additional temporary staff ($12,750) to help
sort out those claim forms.
SB 262 requires all refund requests to be processed within 45 days or DOR must pay interest on
the claim. Should moving the deadline result in slower processing times, then this could result in
an unknown amount of interest being paid.
Oversight assumes DOR is provided with core funding to handle a certain amount of activity
each year. Oversight assumes DOR could absorb the costs related to this proposal. If multiple
bills pass which require additional staffing and duties at substantial costs, DOR could request
funding through the appropriation process.
Section 144.822.4(2) Income Tax Refund for Motor Fuel
DOR notes this proposal also adds a process by which a taxpayer can decide to file for a flat rate
standard motor fuel refund amount rather than fill out the itemized refund form above. This
standard refund would be claimed on their income tax return and would be subject to the
following limits. L.R. No. 2555H.01I
Bill No. HB 1366
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Standard Refund
Amount
Tax YearRefund2023$35 2024$45 2025$65 2026$75
DOR records indicate that in tax year 2020, there were 3,250,763 Missouri individual income tax
returns filed. Assuming that individuals who currently file the detailed refund form will continue
to do so because of the size of their return exceeding the standard refund amount offered, DOR
can assume there will be a potential 3,235,232 (3,250,763 income tax returns – 15,531 itemized
returns) additional filers. This could result in the following estimated income tax claims per
year.
Income Tax Claims by YearTax
Year
Fiscal
YearRefund Claim
20232024$113,233,120 20242025$145,585,440 20252026$210,290,080 20262027$242,642,400
This proposal in Section 142.822.5 requires both the detailed refund request and the standard
refund request to be paid out of the money collected from the additional tax. Therefore this
would result in the following impact. L.R. No. 2555H.01I
Bill No. HB 1366
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March 8, 2023
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Standard and Itemized Refund Impact FY 2024FY 2025State FundLowHighLowHighState Road Fund Standard Refund($82,660,178)($106,277,371)Itemized Rebate($513,112)($12,821,146)($171,037)($4,273,715)Total State Road Fund($83,173,290)($95,481,323)($106,448,409)($110,551,086) Local Funds CART Standard Refund($13,587,974)($17,470,253)Itemized Rebate($84,347)($2,107,586)($28,116)($702,529)Total CART($13,672,322)($15,695,560)($17,498,369)($18,172,781) Other Fuel Funds Standard Refund($16,984,968)($21,837,816)Itemized Rebate($105,434)($2,634,482)($35,145)($878,161)Total Other Local($17,090,402)($19,619,450)($21,872,961)($22,715,977) Total Local($30,762,724)($35,315,010)($39,371,329)($40,888,758) L.R. No. 2555H.01I
Bill No. HB 1366
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Standard and Itemized Refund Impact
FY 2026FY 2027State FundLowHighLowHighState Road Fund Standard Refund($153,511,758)($177,128,952)Itemized Rebate($171,037)($4,273,715)$0 $0 Total State Road Fund($153,682,796)($157,785,474)($177,128,952)($177,128,952) Local Funds CART Standard Refund($25,234,810)($29,117,088)Itemized Rebate($28,116)($702,529)$0 $0 Total CART($25,262,925)($25,937,338)($29,117,088)($29,117,088) Other Fuel Funds Standard Refund($31,543,512)($36,396,360)Itemized Rebate($35,145)($878,161)$0 $0 Total Other Local($31,578,657)($32,421,673)($36,396,360)($36,396,360) Total Local($56,841,582)($58,359,011)($65,513,448)($65,513,448)
Oversight does not have information to the contrary and therefore, Oversight will reflect the
estimates as provided by DOR and B&P.
Officials from the Missouri Highway Patrol
their organization. Oversight does not have any information to the contrary. Therefore,
Oversight will reflect a zero impact in the fiscal note for this agency. L.R. No. 2555H.01I
Bill No. HB 1366
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Officials from the Missouri Department of Transportation defer to DOR for the potential
fiscal impact of this proposal.
FISCAL IMPACT –
State Government
FY 2024
(10 Mo.)
FY 2025FY 2026Fully
Implemented
(FY 2027)
STATE ROAD FUNDCash Flow – timing of
the motor fuel tax
refunds – moved up to
CY instead of FY
($513,112 to
$12,821,146)
($171,037 to
$4,273,715)
($171,037 to
$4,273,715)$0
Loss – taxpayers
claiming the standard
refund vs. the itemized
refund($82,660,178)($106,277,371)($153,511,758)($177,128,952)
ESTIMATED NET
EFFECT ON THE
STATE ROAD FUND
($83,173,290
to
$95,481,323)
($106,448,409
to
$110,551,086)
($153,682,796
to
$157,785,474)($177,128,952) L.R. No. 2555H.01I
Bill No. HB 1366
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FISCAL IMPACT –
Local Government
FY 2024
(10 Mo.)
FY 2025FY 2026Fully
Implemented
(FY 2027)
LOCAL POLITICAL
SUBDIVISIONS
Cash Flow –timing of
the motor fuel tax
refunds
($189,781 to
$4,742,068)
($63,261 to
$1,580,690)
($63,261 to
$1,580,690)
$0Loss – taxpayers
claiming the standard
refund vs. the itemized
refund($30,572,942)($39,308,069)($56,778,322)($65,513,488)
ESTIMATED NET
EFFECT ON LOCAL
POLITICAL
SUBDIVISIONS
($30,762,724
to
$35,315,010)
($39,371,329
to
$40,888,758)
($56,841,582
to
$58,359,011)($65,513,448)
FISCAL IMPACT – Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
FISCAL DESCRIPTION
Currently, motor fuel is exempt from fuel tax, and an exemption and refund may be claimed by a
taxpayer if the tax has been paid and no refund has been previously issued. These exemptions
and refunds are currently issued on a fiscal year basis.
Beginning January 1, 2024, exemptions and refunds shall be based on the tax year. To claim an
exemption and refund, a person may elect to proceed in one of the following ways:
(1) For a receipt-based exemption and refund, a person shall present a statement containing a
written verification that the claim is made under penalty of perjury and that states the total
fuel tax paid in the applicable tax year for each vehicle for which the exemption and refund is
claimed. The claim statement may be submitted electronically and shall contain information
specified in the bill; or
(2) For a standard refund, at the time a person files his or her Missouri income tax return, a
person may select to claim the exemption and refund applied as an immediate refund or applied
as a credit against the person's Missouri income tax liability. A person claiming a standard
refund shall not be entitled to claim a receipt-based refund for the same tax year. L.R. No. 2555H.01I
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The standard refund shall be allocated as follows:
(1) For the 2023 tax year, $30;
(2) For the 2024 tax year, $45;
(3) For the 2025 tax year, $60;
(4) For all tax years beginning on or after January 1, 2026, $75.
The Department of Revenue shall provide a form for taxpayers to make clear their election of
either a receipt-based exemption and refund or a standard refund. The form shall be filed with
the taxpayer's Missouri income tax return and require that certain information be disclosed, as
specified in the bill.
The exemption and refund shall be paid out of the proceeds of the additional tax under
Subsection 3 of Section 142.803, RSMo. If the amount of refunds claimed in a tax year exceeds
the tax collected for the tax year, refunds shall be allowed based on the order in which they are
claimed.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space.
SOURCES OF INFORMATION
Office of Administration - Budget and Planning
Department of Revenue
Missouri Highway Patrol
Missouri Department of Transportation
Julie MorffRoss StropeDirectorAssistant DirectorMarch 8, 2023March 8, 2023