COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:0917H.10C Bill No.:HCS For SS No. 2 for SCS for SB 96 Subject:Political Subdivisions; Economic Development; Taxation and Revenue - General Type:Original Date:April 18, 2023Bill Summary:This proposal modifies provisions relating to taxation.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND
AFFECTED
FY 2024FY 2025FY 2026Fully Implemented
(FY Unknown)General
Revenue($529,531,932)*
(Unknown, less
than
$1,000,589,986)
(Unknown, less
than
$997,638,171)
(Unknown,
less than
$1,353,212,854)**/***
Total
Estimated
Net Effect on
General
Revenue($529,531,932)*
(Unknown, less
than
$1,000,589,986)
(Unknown,
less than
$997,638,171)
(Unknown,
less than
$1,353,212,854)**/***
*The impact for FY 2024 is smaller because it reflects a partial year
**The fully implemented fiscal impact would be realized if the two proposed general revenue
growth dependent reductions are triggered (§143.071.5 & §143.071.6), eventually reducing the
corporate income tax rate to 0%.
***The provisions within §§142.815, 142.822 & 142.824 would be fully implemented in FY
2027.
Numbers within parentheses: () indicate costs or losses. L.R. No. 0917H.10C
Bill No. HCS for SS No. 2 for SCS for SB 96
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ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY Unknown)
State Road
Fund*
(Unknown, could
exceed
$95,186,004 to
$172,732,753)
(Unknown, could
exceed
$117,961,122 to
$187,302,515)
(Unknown, could
exceed
$168,484,856 to
$256,465,881)
(Unknown, could
exceed
($193,575,690 to
$286,773,850)*
Blind Pension
Fund
$0
More or Less
than
($1,198,220)
More or Less
than
($1,320,189)
More or Less
than
($1,320,189)
Total Estimated
Net Effect on
Other State
Funds
(Unknown,
could exceed
$95,186,004 to
$172,732,753)
(Unknown,
could exceed
$119,159,342 to
$188,500,735)
(Unknown,
Could exceed
$169,805,045 to
$257,786,070)
(Unknown,
could exceed
($194,895,879 to
$288,094,039)*
* The provisions within §§142.815, 142.822 & 142.824 would be fully implemented in FY 2027.
ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY Unknown)
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 Unknown)
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. L.R. No. 0917H.10C
Bill No. HCS for SS No. 2 for SCS for SB 96
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ESTIMATED NET EFFECT ON LOCAL FUNDSFUND
AFFECTED
FY 2024FY 2025FY 2026Fully
Implemented
(FY Unknown)
Local
Government
Could exceed
($35,020,850 to
$63,702,525)
Could exceed
($385,854,826 to
$411,501,643)
Could exceed
($438,825,727 to
$471,366,654)
Could exceed
($448,169,197 to
$484,157,180)
FISCAL ANALYSIS
ASSUMPTION
Due to time constraints relative to the complexity of this proposal, Oversight has performed
limited analysis of agency responses and of the bill. Oversight has presented this fiscal note on
the best current information that we have or on information regarding a similar bill(s). Oversight
will continue to review to determine if an updated fiscal note should be prepared.
§§67.1421 & 238.225 – Special Taxing Districts
Officials from the City of Kansas City state this proposal could have a negative fiscal impact on
Kansas City in an indeterminate amount if the legislation makes it more difficult to establish
community improvement districts and thereby impedes economic development.
Oversight assumes this could possibly make it harder to establish a Community Improvement
District and/or a Transportation Development District. However, Oversight assumes this to be a
potential indirect
Officials from the Office of Administration - Budget and Planning assume the proposal will
have no fiscal impact on their organization. Oversight does not have any information to the
contrary. Therefore, Oversight will reflect a zero impact in the fiscal note for these sections of
the proposal.
In response to a previous version, officials from the Missouri Department of Transportation
and the each assume the proposal will have no fiscal impact on their
respective organizations. Oversight does not have any information to the contrary. Therefore,
Oversight will reflect a zero impact in the fiscal note for these agencies for these sections of the
proposal.
§§137.073, 137.115, 138.060 – Motor Vehicle Assessment Valuations L.R. No. 0917H.10C
Bill No. HCS for SS No. 2 for SCS for SB 96
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Officials from the Office of Administration - Budget and Planning (B&P) note this proposal
adds farm machinery to the definition of motor vehicles. B&P notes that this provision would
increase the number of items that would qualify under the newly proposed depreciation schedule.
Therefore, this provision may impact revenues to the Blind Pension Trust Fund.
This proposal would expand the allowable national automotive publications that may be used to
determine a motor vehicle’s market value for tax year 2023. Beginning with tax year 2024,
county assessor must use a vehicle’s MSRP and proposed depreciation schedule to determine a
motor vehicle’s market value. B&P notes that to the extent this changes the market value
assigned to vehicles, this could result in an impact to the Blind Pension Trust Fund.
Officials from the State Tax Commission (STC) assume this has an unknown fiscal impact on
local taxing jurisdictions such as school districts, counties, cities who rely on property tax
assessments as a source of revenue. The bill would require additional FTE for the State Tax
Commission to receive the Manufacturer Suggested Retail Price (MSRP) from a vendor and then
configure that data to fit the multiple assessment programs used in the state. The cost of the data
as well as the cost of licensing for each county in the state has been estimated to be less than
$200,000. The bill allows for all currently assessed vehicles to use a previously assessed value
in the depreciation schedule, but the MSRP would have to be obtained for each new vehicle and
used vehicles purchased from outside of the state by Vehicle Identification Number. The current
system uses average trade in value listed in the October issue of the National Automobile
Dealers Association guide and that value will be less than the starting value of MSRP in most
cases which could cause an increase in assessments. The use of a depreciation schedule would
require that the vehicle values decrease each year regardless of the true market values which
could cause a decrease in the assessments generated. The depreciation schedule stopping after
10 years would cause a reduction due to approximately 50% of vehicles being removed from
assessment and that would lead to approximately a 20% reduction of the total assessment for
motor vehicles. The impact varies by county as the percentage of real and personal property in
each county depends on several factors. The range of personal property assessed value
compared to the total assessed value goes from 15.8% to 46.5% with the average being 29.5% in
2022, so the higher percentages would be impacted at greater amounts. The bill also includes
farm machinery which would follow the same pattern as the motor vehicles. Farm machinery
and equipment accounts for small percentage of the total personal property but it would have a
greater impact on rural counties. The bill also requires all of the software used in the counties to
meet minimum standards which could require a cost to some counties for upgrades.
Oversight will reflect this fiscal impact to the STC starting in FY 2024.
Officials from the Department of Social Services assume Section 137.115.9 is amended to
require the assessors to use a nationally recognized automotive trade publication to determine the
value of motor vehicles for the tax year ending on or before December 31, 2023. The state tax
commission shall determine which publication shall be used. Beginning January 1, 2024,
assessors are required to use the manufacturer’s suggested retail price for all manufactured motor
vehicles as acquired annually by the state tax commission for the original value in money of all L.R. No. 0917H.10C
Bill No. HCS for SS No. 2 for SCS for SB 96
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motor vehicle assessment valuations. A fifteen-year depreciation schedule shall be applied to
each manufacturer’s suggested retail price.
Blind Pension (BP) is funded from 0.03% of each $100 assessed valuation of taxable property.
Assessing vehicles based on the suggested depreciation schedule could impact the amount
received for the BP fund. According to the 2022 State Tax Commission Annual Report
$20,659,394,897 of the $135,215,666,531 total assessed valuation for the State of Missouri
comes from vehicles including recreational vehicles. Therefore, approximately $6,197,818
[($20,659,394,897/100)*0.03 = $6,197,818.47, rounded down] in property tax revenue is
collected from motor vehicles.
Motor vehicles are currently assessed based on a recommended guide of information for
determining the true value of a motor vehicle and includes vehicles that are greater than fifteen
years of age in the assessment. According to the State Tax Commission, the proposed change to
assess vehicles based on a depreciation schedule could result in a reduction in tax revenue from
motor vehicles of up to 20%. Therefore, FSD estimates that the potential impact to the BP fund
would be a decrease of up to $1,239,564 ($6,197,818*0.20 = $1,239,563.60, rounded up).
Tax
Collection
Year
True Value of
Motor Vehicles
Assessed at
Current Rate of
33 1/3%
Assessment
Rate
Assessed Value
of Motor
Vehicles
Tangible
Personal
Property
Tax
Collections
for the BP
fund
(0.03% of
each $100
assessed)
Percentage
Reduction
in Motor
Vehicle
Assessment
Reduction
in
Collections
for the BP
Fund
2025$61,984,383,12933 1/3%$20,659,394,897$6,197,81820%$1,239,564
According to the 2022 State Tax Commission Annual Report
$135,215,666,531 total assessed valuation for the State of Missouri comes from Farm Machinery
total assessed valuation for the State of Missouri comes from vehicles including recreational
vehicles. Therefore, approximately $152,846 [($509,487,451/100)*0.03 = $152,846.24, rounded
down] is collected in the BP fund from Farm Machinery tax revenue. The State Tax
Commission is unable to identify the age of farm machinery or provide an estimate on the effect
of exempting farm machinery that is greater than fifteen years of age from taxation; therefore,
the effect is unknown. The Family Support Division (FSD) assumes that it will result in a
reduction in tax revenue from farm machinery of up to 20%. Therefore, FSD estimates that the L.R. No. 0917H.10C
Bill No. HCS for SS No. 2 for SCS for SB 96
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tax revenue from farm machinery collected in the BP fund could decrease up to $30,569
($152,846*0.20 = $30,569.20, rounded down).
Tax
Collection
Year
True Value of
Farm
Machinery
Assessed at
Current Rate of
12%
Assessment
Rate
Assessed
Value of
Motor
Vehicles
Tangible
Personal
Property
Tax
Collections
for the BP
fund (0.03%
of each
$100
assessed)
Percentage
Reduction in
Motor
Vehicle
Assessment
Reduction
in
Collections
for the BP
Fund
2025$4,245,728,75812%$509,487,451$152,84620%$30,569
Therefore, FSD estimates that the fiscal impact to the BP fund as a result of this legislation
would be $1,270,133 ($1,239,564 + $30,569) in SFY 25 and ongoing.
In response to similar provisions in SB 8 (2023), officials from the Office of Administration -
Budget and Planning (B&P) noted that this proposal would change the assessment method for
motor vehicles. Therefore, all model 2014 and older vehicles would be assigned a taxable value
of $1 in tax year 2024. The following tax year (2025), all model 2015 and older vehicles would
be assigned a taxable value of $1. Oversight notes this proposal also has a 10 year
depreciation schedule but ends with a depreciated value of 99.9% - instead of a $1 as in SB
8, however, it is the best estimate that we have.
Based on information provided by DOR, this proposal may reduce the market value for 64.0% of
motor vehicles in tax year 2024. By tax year 2029, this proposal may reduce the market value
for 88.4% of motor vehicles. B&P notes that this data is based on current registrations, for the
purpose of this fiscal note B&P will assume that the age distribution of registered vehicles will
not significantly differ from the current distribution. Table 1 shows the number and percent of
vehicles registered in Missouri by model year and the tax year in which they would become
exempt from property tax.
Table 1: Age of Vehicles
Model Year
Registered
Vehicles
% of Total
Registered
Vehicles
Tax
Year
Exempt
2011 &
earlier3,645,82251.3%2024
2012277,4603.9%20242013300,5224.2%2024 L.R. No. 0917H.10C
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2014322,2884.5%20242015350,2144.9%20252016351,9995.0%20262017366,8915.2%20272018339,3654.8%20282019331,2624.7%2029Total6,285,82388.4%
Using data published by the U.S. Department of Transportation – Bureau of Transportation
Statistics, B&P was able to determine the average price of new vehicles purchased between 1990
and 2019. Using the depreciation schedule allowable under IRS rules and Section 137.122,
RSMo, B&P estimated the current approximate fair market value for each model year. B&P
then adjusted the market value by the assessment percentage in order to determine the final
assessed value. B&P notes that in order to prevent double counting with the estimated loss under
Section 137.115.1, B&P assumed a 31% assessment percentage for this provision. Table 2
shows the estimated average assessed value (market value x assessment rate) under current law
versus this proposal.
Table 2: Estimated Assessed ValueModel YearCurrent*Proposed Difference2011 &
earlier$813 $1 ($812)
2012$1,080 $1 ($1,079)2013$1,096 $1 ($1,095)2014$1,100 $1 ($1,099)2015$1,129 $1 ($1,128)2016$1,144 $1 ($1,143)2017$1,152 $1 ($1,151)2018$1,160 $1 ($1,159)2019$1,178 $1 ($1,177)*Assumes 31% assessment percentage to
prevent double counting the loss impact from
Section 137.115.1
B&P notes that the Blind Pension Trust Fund levies a tax on property at the rate of $0.03 per
$100 assessed value. In addition, based on publicly available data, B&P estimates that the
average local personal property tax levy is 8.5%. Table 3 shows the average estimated revenue
impact per vehicle. L.R. No. 0917H.10C
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Table 3: Estimated Revenue Impact per Vehicle
Model Year
Assessment
Value
Reduction
Blind
Pension
Trust Fund
Local
Revenue
2011 &
earlier($812)($0.24)($68.78)
2012($1,079)($0.32)($91.40)2013($1,095)($0.33)($92.75)2014($1,099)($0.33)($93.09)2015($1,128)($0.34)($95.54)2016($1,143)($0.34)($96.82)2017($1,151)($0.35)($97.49)2018($1,159)($0.35)($98.17)2019($1,177)($0.35)($99.70)*Assumes 31% assessment percentage to prevent double
counting the loss impact from Section 137.115.1
Therefore, B&P estimates that proposal may reduce revenues to the Blind Pension Trust Fund by
$1,169,311 in tax year 2024 (FY25). By tax year 2029 (FY30) this proposal could reduce
revenues to the Blind Pension Trust Fund by $1,771,196.
B&P also estimates that this section may reduce total local revenues by $333,994,687 in tax year
2024 (FY25). By tax year 2029 (FY30) this proposal could reduce revenues to local jurisdictions
by $503,645,163. Table 4 shows the estimated impact by fiscal year.
Table 4: Estimated Revenue Impact for
MVs
Tax Year
(Fiscal
Year)
Blind
Pension
Trust Fund
Local
Collections
2024
(FY25)($1,169,311)($333,994,687)
2025
(FY26)($1,288,384)($367,454,133)
2026
(FY27)($1,408,064)($401,534,676)
2027
(FY28)($1,536,476)($437,302,880)
2028
(FY29)($1,655,254)($470,618,342)
2029
(FY33)($1,771,196)($503,645,163) L.R. No. 0917H.10C
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B&P notes that these estimates do not include the proposed depreciation schedules. Therefore,
actual losses could be significantly higher than the amounts shown above.
Farm Machinery Property Tax Assessment
Also in response to Perfected SB 8, the Office of Administration - Budget and Planning noted
that this proposal would become effective August 28, 2023, which is the middle of tax year
2023. However, assessments are done as of January 1
st
and it is unlikely that assessors would
have enough time to switch to this new method before tax bills are required to be sent.
Therefore, for the purpose of this fiscal note B&P will assumes that the depreciation schedule
will not become effective until tax year 2024.
Based on data published by STC, the assessed value for farm machinery was $509,487,451 in tax
year 2022. Assuming a similar property tax levy is applied to farm machinery and all
agricultural products, B&P estimates that total taxes paid on farm machinery was $34,441,560
for tax year 2022.
For the purpose of this fiscal note, B&P will assume that the age distribution of farm machinery
is similar to the age distribution of motor vehicles registered in Missouri. Using the estimated
impact from the changes to motor vehicles, B&P estimates that in tax year 2024 this proposal
could reduce tax collections on farm machinery by 24.0%. By tax year 2029, this proposal could
reduce tax collection on farm machinery by 36.2%.
Therefore, B&P estimates that proposal may reduce revenues to the Blind Pension Trust Fund by
$18,909 in tax year 2024 (FY25). By tax year 2029 (FY30) this proposal could reduce revenues
to the Blind Pension Trust Fund by $43,593.
B&P also estimates that this section may reduce total local revenues by $8,230,682 in tax year
2024 (FY25). By tax year 2029 (FY30) this proposal could reduce revenues to local jurisdictions
by $12,411,600. Table 5 shows the estimated impact by fiscal year.
Table 5: Estimated Revenue Impact for
Farm Machinery
Tax Year
(Fiscal
Year)
Blind
Pension
Trust Fund
Local
Collections
2024
(FY25)($28,909)($8,230,682)
2025
(FY26)($31,805)($9,055,276)
2026
(FY27)($34,755)($9,895,137) L.R. No. 0917H.10C
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2027
(FY28)($37,851)($10,776,657)
2028
(FY29)($40,735)($11,597,707)
2029
(FY33)($43,593)($12,411,600)
B&P notes that these estimates do not include the proposed depreciation schedules. Therefore,
actual losses could be significantly higher than the amounts shown above.
Summary
B&P estimates that this proposal could decrease TSR and the Blind Pension Trust Fund by an
amount that could exceed $1,619,298 in FY25. By FY30, this proposal could decrease TSR and
the Blind Pension Trust Fund by an amount that could exceed $2,235,867. This proposal could
also reduce local funds by an amount that could exceed $454,625,745 in FY25. By FY30, this
proposal could decrease local funds by an amount that could exceed $628,457,139. Table 6
shows the total proposal impact to state and local funds.
Table 6: Total Impact by Fiscal YearState FundsFY25FY26FY27Blind Pension Trust Fund Personal Property Assessment
Reduction($421,078)($421,078)($421,078)
MVs 10yrs and Older($1,169,311)($1,288,384)($1,408,064)Farm Machinery 10yrs and Older($28,909)($31,805)($34,755)Total Blind Pension Trust Fund
(TSR)($1,619,298)($1,741,267)($1,863,897)
Local Funds Local Property Tax Personal Property Assessment
Reduction($112,400,376)($112,400,376)($112,400,376)
MVs 10yrs and Older($333,994,687)($367,454,133)($401,534,676)Farm Machinery 10yrs and Older($8,230,682)($9,055,276)($9,895,137)Total Local Property Tax($454,625,745)($488,909,785)($523,830,189)Table 6: Total Impact by Fiscal YearState FundsFY28FY29FY30Blind Pension Trust Fund Personal Property Assessment
Reduction($421,078)($421,078)($421,078)
MVs 10yrs and Older($1,536,476)($1,655,254)($1,771,196) L.R. No. 0917H.10C
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Farm Machinery 10yrs and Older($37,851)($40,735)($43,593)Total Blind Pension Trust Fund
(TSR)($1,995,405)($2,117,067)($2,235,867)
Local Funds Local Property Tax Personal Property Assessment
Reduction($112,400,376)($112,400,376)($112,400,376)
MVs 10yrs and Older($437,302,880)($470,618,342)($503,645,163)Farm Machinery 10yrs and Older($10,776,657)($11,597,707)($12,411,600)Total Local Property Tax($560,479,913)($594,616,425)($628,457,139)
Oversight notes the Personal Property Tax Reduction is not in this bill; therefore, we will not use
those estimates. However, this estimate is the best that we have and will use them in the fiscal
note (instead of an “unknown – substantial” loss).
In response to similar legislation from this year, Perfected HCS No. 2 for HB 713, officials from
the Cape Girardeau County Assessor assume this revision will result in an annual net loss of
property tax revenue of $1.5 million or greater to Cape Girardeau County alone.
Officials from the Lincoln County Assessor assume by using the 10-year depreciation schedule
on vehicles this will create a serious fiscal impact. Lincoln County has over 65% of its vehicles
older than 10 years and the value after 10 years will be basically zero, the fiscal impact could
more than likely be in the $100k's of tax revenue lost. This will affect taxing entities that have
had higher total assessed values drop dramatically and therefore open the possibility of raising
tax rates on real property to offset revenue losses.
Officials from the County Employees’ Retirement Fund (CERF) assume this proposal would
likely result in reductions in contribution revenue to CERF of an unknown amount annually. A
certain portion of the moneys that are used to fund the County Employees’ Retirement Fund are
tied to the collection of property taxes. Data is not available to quantify how changes to motor
vehicle assessments would impact contribution revenue but CERF assumes there would be a
negative impact.
In response to similar legislation from this year, Perfected HCS No. 2 for HB 713, officials from
the City of Springfield
respective city of an indeterminate amount.
Officials from the City of Kansas City state this section could have a substantial negative fiscal
impact.
Oversight notes some taxing entities have tax rate ceilings that are at their statutory or voter
approved maximum or are at a fixed rate. For these taxing entities, any decrease in the assessed L.R. No. 0917H.10C
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values would not be offset by a higher tax rate (relative to current law), rather it would result in
an actual loss of revenue.
Based on information provided by the Office of the State Auditor, Oversight notes, in 2020,
there were over 2,500 tax entities with 4,000 different tax rates. Of those entities, 2,980 tax rate
ceilings were below the entities’ statutory or voter approved maximum tax rate and 1,098 tax rate
ceilings were at the entities’ statutory or voter approved maximum rate. (These numbers do not
include entities, which use a multi-rate method and calculate a separate tax rate for each subclass
of property.)
Oversight notes this part of the proposal has an emergency clause.
Oversight notes this proposal would impact the assessed value of personal property over time.
Oversight doesn’t have enough information to estimate a fiscal impact to the Blind Pension Fund
or to local political subdivisions from these changes. Therefore, Oversight will show an
unknown loss in property tax revenue beginning in FY 2025.
§§142.815, 142.822 & 142.824 – Motor Fuel Tax Exemption
Officials from the Department of Revenue (DOR) assume the following regarding this
proposal:
Motor Fuel Refund Period Change (§142.822.2)
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
Tax
Fully Implemented
(FY 2027)
FY 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$0
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 L.R. No. 0917H.10C
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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 Sept 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 2 separate motor fuel
rates on them. This will start on January 1, 2024.
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. So the impact below shows how much of the
refunds will now shift to another fiscal year (refund period).
DOR notes that the first refund period was completed from July 2022 to September 2022 for the
increase that occurred from October 1, 2021 to June 30, 2022. That increase was $0.025. So it
will not be impacted. DOR records indicate $423,947 in refunds were claimed, while receiving L.R. No. 0917H.10C
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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 has 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.
Estimated Cash Flow Impact from Refund Claim Due to 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 the forms and the 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 tax 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, 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 a hard copy mailed.
Should the forms 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. If moving the deadline results in slower processing times, this could result in an
unknown amount of interest being paid. L.R. No. 0917H.10C
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Oversight assumes DOR is provided with core funding to handle a certain amount of activity
each year. Oversight assumes DOR could absorb the programming costs related to this part of
the proposal. If multiple bills pass which require additional staffing and duties at substantial
costs, DOR could request funding through the appropriation process.
Officials from the Office of Administration - Budget and Planning (B&P) assume the
following regarding this proposal:
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.
Table 1: Timing of Refund Claims
Current Refund Timing
Proposed Refund
Timing
Date of Purchase
Fuel
Tax
Rate
Date
Fiscal
YearDate
Fiscal
Year10/2021 - 12/2021$0.025 7/2022 - 9/2022FY 2024
7/2022 -
9/2022FY 20241/2022 - 6/2022$0.025 7/2022 - 9/2022FY 2024
7/2022 -
9/2022FY 20247/2022 - 12/2022$0.050 7/2023 - 9/2023FY 2025
1/2023 -
4/2023FY 20241/2023 - 6/2023$0.050 7/2023 - 9/2023FY 2025
1/2024 -
4/2024FY 20257/2023 - 12/2023$0.075 7/2024 - 9/2024FY 2026
1/2024 -
4/2024FY 20251/2024 - 6/2024$0.075 7/2024 - 9/2024FY 2026
1/2025 -
4/2025FY 2026 L.R. No. 0917H.10C
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7/2024 - 12/2024$0.100 7/2025 - 9/2025FY 2026
1/2025 -
4/2025FY 20261/2025 - 6/2025$0.100 7/2025 - 9/2025FY 2026
1/2026 -
4/2026FY 20267/2025 - 12/2025$0.125 7/2026 - 9/2026FY 2027
1/2026 -
4/2026FY 20261/2026 - 6/2026$0.125 7/2026 - 9/2026FY 2027
1/2027 -
4/2027FY 20277/2026 - 12/2026$0.125 7/2027 - 9/2027FY 2028
1/2027 -
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 2022 and September 2022. 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.
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
262 (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 FundLowHighLowHighLowHigh L.R. No. 0917H.10C
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State 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)
Oversight assumes this part of the proposal will not increase or decrease revenue; rather, only
the timing of the motor fuel tax refunds will change. Oversight will reflect the cash flow
estimates as provided by DOR and B&P as the estimates have been updated to reflect the actual
amount that was refunded (0.6%) in FY 2022. Oversight will range the cash flow impact as
DOR and B&P have indicated (from a low of 0.6% (actual) to an estimated 15%. Oversight
notes, once all of the tax increases have gone into effect, there will be no further fiscal impact
due to cash flow changes.
Section 142.815, 142.822 & 142.824 Motor Fuel Refund for Charity
Currently, taxpayers who purchase motor fuel for non-highway use (farms, boats) are allowed to
claim a refund of the motor fuel tax they pay.
The taxpayer submits their receipts to the Department showing the gallons purchased with a
refund request form. Once processed, the Department sends the taxpayer a refund of their motor
fuel tax paid.
Starting October 1, 2023, this provision will allow the non-highway use taxpayer to provide their
receipts to a federally qualified tax exempt entity (charity) who would claim the refund on the
taxpayer’s behalf. This is established as a way of donating money for the taxpayer to the charity.
This provision then allows the taxpayer to receive a subtraction against their Missouri adjusted
gross income of the amount donated. This subtraction is only allowed if the taxpayer does not
claim the refund amount as a charitable contribution on their federal income tax form.
In FY 2022 the Department processed $9,146,015 in non-highway refund claims. The motor
fuel rate at the time started at $0.17 per gallon and then increased to $0.195 per gallon. DOR
estimates that refund claims were made for 49,071,081 gallons.
SB 262 adopted in 2021, established an increasing motor fuel tax rate of $0.025 per year until the
rate increases $0.12 per gallon for a total of $0.295 per gallon. Accounting for the SB 262
increases, DOR estimates the total non-highway use refund claims could total $14,468,143 by
tax year 2026. The estimated amount of non-highway related motor fuel tax refunds through the
implementation of SB 262 is: L.R. No. 0917H.10C
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Estimated Refunds by YearFiscal
Year
Non-Highway Use
Refunds
2023 $10,788,751 2024 $12,013,963 2025 $13,242,931 2026 $14,468,143 2027 $14,468,143
The Department is unable to determine how many of these taxpayers will choose to donate their
receipts to a charity and then claim the deduction. For fiscal note purposes, DOR will show the
loss up to the total amount estimated to be refunded.
The Department notes that deductions do not reduce revenues on a dollar for dollar basis, but
rather in proportion to the top tax rate applied. Therefore, DOR will show the estimated impact
to general revenue from the deduction throughout the implementation of SB 262 and with the
individual income tax rate reductions scheduled under SB 3 (2022).
Estimated Revenue Loss by Fiscal YearTax Year (Fiscal Year)
Tax
Rate
2023
(FY24)
2024
(FY25)
2025
(FY26)
2026
(FY27)
2027 (FY
28)
4.95%($534,043)($594,691)($655,525)($716,173)($716,173)4.35% ($522,607)($576,068)($629,364)($629,364)4.25% ($562,825)($614,896)($614,896)4.15% ($600,428)($600,428)4.05% ($585,960)
This is a new subtraction that would need to be added to the MO-A form. This would require
computer programming changes, form changes and website changes. These changes are
estimated to cost $7,193. Additionally, this could result in additional errors and correspondence
generated. Should the number of errors and correspondent justify the additional FTE, the
Department will seek the additional FTE through the appropriation process.
• 1 FTE Associate Customer Service Representative ($31,200) for every 14,700 errors
created
• 1 FTE Associate Customer Service Representative for every 5,700 pieces of
correspondence generated L.R. No. 0917H.10C
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Oversight assumes DOR is provided with core funding to handle a certain amount of activity
each year. Oversight assumes DOR could absorb the programming and personnel 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. For fiscal note purposes,
Oversight will assume 20% of these refunds will be donated. Therefore, Oversight will use
20% of DOR’s estimates.
DOR notes Section 142.822 will allow a taxpayer who purchases motor fuel for use on the
highway to donate their increased motor fuel tax receipts to a charity. However, they are not
granted a deduction for doing so.
Since the fiscal note for SB 262 assumed all eligible taxpayers would receive a refund of the
increased motor fuel rate, and this proposal just changes who claims the refund, this is not
expected to result in any additional fiscal impact from who claims the refund.
However, a person who donates to a charity has the ability to claim a deduction on their federal
and state tax returns. If this proposal encourages more people to claim the federal charity
deduction that could lower their federal adjusted gross income that is reported on their Missouri
tax return. That in turn could lower the amount of taxes DOR receives. It is unknown how
many people would do this. This could result in a $0 to Unknown loss.
Section 142.822 Motor Fuel Refund
SB 262 adopted in 2021 established an increasing motor fuel tax rate over the next five years.
As part of the increasing rate, a procedure was established that allowed taxpayers to receive a
refund of the increased motor fuel amount if they did not wish their increased motor fuel tax they
paid to go to road improvements. To receive the refund a taxpayer had to submit an application
with certain required information.
The application required:
The VIN number of the vehicle that bought the fuel
Date of sale of the fuel
Name and address of the purchaser of fuel
Name and address of the seller of the fuel
Number of gallons purchased
Number of gallons purchased and charged Missouri fuel tax
These records were to be maintained a minimum of three years for the Department to be able to
do audits if needed.
This proposal changes the required information needed for claiming a refund. It removes the
date of sale and name and address of the seller as required information. It only requires that the
total number of gallons purchased be submitted. And it also only requires records to be
maintained if provided. L.R. No. 0917H.10C
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In SB 262 the Department noted by receiving the originally required data the Department would
ensure that each purchase was made in Missouri and charged the appropriate motor fuel tax and
be able to ensure the same gallons were not reported by more than one vehicle. The Department
would be able to audit to ensure more refunds were not paid out than actually purchased.
The changes proposed in this bill may increase the original refund estimates. No longer
requiring proof of the sale date, or the address of the seller, may allow taxpayers to report gallons
purchased in other states in their total gallons purchased. This could result in additional refunds
paid out than actual motor fuel tax received.
No longer requiring that taxpayers keep records, may result in the Department being unable to
audit records to ensure the appropriate number of gallons were refunded.
The Department is unable to determine the potential increased refunds that could be paid out
under this proposal. It is unknown but could be expected to exceed $100,000 annually.
Officials from the Office of Administration - Budget and Planning (B&P) assume the
following:
Donation of Motor Fuel Tax Refund (Sections 142.815, 142.822, and 142.824)
Non-Highway Use Motor Fuel Tax Exemption and Refund
Sections 142.815 and 142.824 would allow taxpayers to donate their motor fuel tax refund, for
non-highway use, to a non-profit entity beginning October 2023. B&P notes that the information
requirements are not changed under this proposal, only who would receive the refund.
Section 142.815 would grant taxpayers a deduction for any refund claims they donated to
charity. B&P notes that such taxpayer would only be allowed to claim the deduction in this
section if they did not take the charitable deduction on their itemized federal and state income tax
returns.
In FY 2022, total non-highway use refund claims were $9,146,015. B&P notes that these
refunds were granted both before and after the motor fuel tax increased from $0.17 to $0.195 per
gallon. Using the distribution of gallons sold between the two tax rate periods, B&P estimates
that refund claims were made for 49,071,081 gallons.
B&P notes that under SB 262 (2021), the motor fuel tax is scheduled to increase by $0.025 per
year, for five years, until the total motor fuel tax is $0.295. Accounting for the increases
scheduled to occur under SB 262 (2021), B&P estimates that total non-highway use refund
claims could total $14,468,143 by fiscal year 2026. Table 1 shows the estimated amount of non-
highway related motor fuel tax refunds through the implementation of SB 262 (2021). L.R. No. 0917H.10C
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Table 1: Estimated
Refunds by Year
Fiscal
Year
Non-Highway
Use Refunds
2023$10,788,751 2024$12,013,963 2025$13,242,931 2026$14,468,143 2027$14,468,143
B&P is unable to determine how many non-highway use refund claims may be donated to a non-
profit entity. Therefore, B&P will reflect the loss as “up to” the total amount claimed.
B&P notes that deductions do not reduce revenues on a dollar for dollar basis, but rather in
proportion to the top tax rate applied. Therefore, B&P will show the estimated impacts
throughout the implementation of the tax rate reductions from SB 3 (2022).
Therefore, B&P estimates that this proposal could reduce Total State Revenue (TSR) and
General Revenue (GR) by up to $534,043 in FY 2024 (tax year 2023, top tax rate 4.95%). Once
SB 3 (2022) and SB 262 (2021) fully implement, this proposal could reduce TSR and GR by up
to $651,066 annually. Table 2 shows the estimated impact by top tax rate and year.
Table 2: Estimated Revenue Loss by Fiscal YearTax Year (Fiscal Year)
Tax
Rate
2023
(FY24)
2024
(FY25)
2025
(FY26)
2026
(FY27)2027 (FY 28)
4.95%($534,043)($594,691)($655,525)($716,173)($716,173)4.80% ($576,670)($635,661)($694,471)($694,471)4.70% ($622,418)($680,003)($680,003)4.60% ($665,535)($665,535)4.50% ($651,066)
Section 142.822 – Increased Motor Fuel Tax Refund L.R. No. 0917H.10C
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Section 142.822 would allow taxpayers to donate their motor fuel tax refund, for non-highway
use, to a non-profit entity beginning October 2023. B&P notes that the information requirements
are not changed under this proposal, only who would receive the refund. B&P further notes that
taxpayers are not granted an additional income tax deduction for any refunds donated. However,
individuals could claim the donated refunds on their itemized federal and state income tax
returns, under the existing charitable contribution itemized deduction. In addition, it is unknown
if the ability to donate the fuel tax refund would encourage more refund claims than what would
have otherwise occurred.
Therefore, B&P estimates that this provision could have an unknown negative impact on TSR
and GR through potential charitable itemized deductions. This provision could also reduce the
State Road Fund, as well as local fuel tax funds, through increased motor fuel tax refund claims.
Information Required for Motor Fuel Tax Refund (Section 142.822)
This proposal removes certain requirements currently necessary in order to claim the additional
motor fuel tax under 142.803.3. Taxpayers would no longer be required to provide the date of
sale, seller’s name and address, as well as each fuel tax receipt.
B&P notes that this proposal would essentially prohibit DOR from completing any motor fuel
tax refunds under this section, as taxpayers would no longer be required to keep or provide
supporting documentation.
B&P notes that the estimates provided for SB 262 (2021) included the possibility that 100% of
qualifying purchases were refunded. Therefore, while this provision makes it easier to claim the
motor fuel tax refunds, no additional revenue loss is expected beyond what B&P originally
estimated.
Oversight does not have information to the contrary and therefore, Oversight will reflect the
estimates as provided by DOR and B&P.
Section 142.822.10 Mobile App
This proposal requires the Department to create a mobile application that will allow claims to be
submitted on a person’s phone at the time of motor fuel purchase. This proposal requires that the
person be able to demonstrate the purchase at the pump. This will require the Department to
create a mobile application that can interact with the current motor fuel system. L.R. No. 0917H.10C
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This proposal states the development and maintenance of the application should be paid out the
fuel tax road fund. The Constitution designates how that money may be spent and the
Department is unable to determine if this would be an approved expense.
It should be noted that this does not require the Department to refund the payment at the time of
submission. DOR assumes the database will hold the submissions and DOR will refund during
the approved period.
The Department estimates this system would cost at least $500,000.
Oversight does not have information to the contrary and therefore, Oversight will reflect the
estimate for the mobile application as provided by the DOR to the State Road Fund.
Officials from the Office of Administration - Budget and Planning (B&P) assume the
following:
Mobile Rebate Application (Section 142.822)
Section 142.822.10 requires DOR to develop a mobile application that allows users to submit a
refund claim at the time of fuel purchase, rather than making an annual claim for all purchases at
once. B&P notes that if refund claims are made at the time of purchase, rather than on an annual
basis, this could result in a cash flow impact where refunds that would have been claimed in year
2 are now claimed in year 1.
While this provision will not increase the overall number of refunds, it could 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. However, there will no longer be a cash flow
impact by FY 2027, once SB 262 (2021) has fully implemented.
In response to similar legislation from this year, Perfected HB 519, B&P defers to DOR for the
costs to develop and maintain a mobile application.
Section 144.822.4(2) Income Tax Refund for Motor Fuel - Standard Refund
DOR officials also note 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. 0917H.10C
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Standard Refund
Amount
Tax YearRefund2023$30 2024$45 2025$60 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.
Standard Income Tax Claims by
Year
Tax
Year
Fiscal
YearRefund Claim
20232024$97,056,960 20242025$145,585,440 20252026$194,113,920 20262027$242,642,400
This proposal in Section 142.822.5 requires both the itemized refund request and the standard
refund request to be paid out of the money collected from the additional tax.
This proposal will require the Department to modify its MO-1040 and MO -1040P forms,
website and individual income tax computer system. These changes are estimated to cost
$7,193.
Oversight assumes DOR is provided with core funding to handle a certain amount of activity
each year. Oversight assumes DOR could absorb the programming 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. L.R. No. 0917H.10C
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Officials from the Office of Administration - Budget and Planning (B&P) assume the
following:
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.
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
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 L.R. No. 0917H.10C
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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.
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. 0917H.10C
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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)
Oversight does not have information to the contrary and therefore, Oversight will reflect the
estimates as provided by DOR and B&P.
Section 142.822.8 Weight Restriction Removed
SB 262 contained a provision that would not allow a vehicle over 26,000 pounds to qualify for
the refund. This proposal removes that restriction and would allow them to qualify for the L.R. No. 0917H.10C
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refund of the increasing fuel tax rate. To qualify, those vehicles over 26,000 pounds must
provide documentation proving their motor vehicle is owned and licensed in Missouri by a
corporation or sole proprietor and that the vehicle only operated in Missouri. Should it operate
outside the state, the miles and fuel must be separated by what was used in Missouri and what
was used outside Missouri.
This provision would become effective August 28, 2023, but due to the previous provision
moving the refund filing period this will have a fiscal impact starting in FY 2024.
For the fiscal note of SB 262, the Department projected the motor fuel increase and the amount
expected to be refunded if 15% of all taxpayers (low) applied for the refund and if 100% of the
taxpayers (high) applied for the refund.
This range was based on a similar program in South Carolina that capped the number of
participants at 15% and the total amount that could be claimed. DOR used information on the
number of actual vehicles and their average miles driven to estimate the refund amount.
While the first year of the program did not find the 15% filing for the refund, changes in the
economic conditions and the increasing amount of the tax, indicates more taxpayers may claim
the refund in the future. Therefore, for the purpose of this fiscal note, DOR will continue to use
that same 15%-100% participation. Additionally, these heavier vehicles tend to use more fuel,
which may encourage more participation in the refund program.
Based on information from its Motor Vehicle Databases, DOR was able to determine there are
approximately 1.2 million vehicles that were ineligible for the refund based on their vehicles
weight. However, DOR was unable to determine how many of them would still not meet the
requirements of this proposal. For fiscal note purposes, DOR will assume all meet the new
requirements and DOR notes the impact will be less than projected should some vehicles still not
qualify.
DOR’s FY 2022 motor fuel collections show there were 4,323,936,974 gallons of gasoline and
diesel purchased in FY 2022. Using these numbers, DOR was able to calculate newer revenues
and potential refunds to SB 262. DOR was able to calculate the potential refunds by removing
the current qualifying vehicles. These are the updated revenue and refund potential amounts. L.R. No. 0917H.10C
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Table 1: Estimated Additional Refunds FY 2024FY 2025FY 2026FY 2027Estimated Collections (prior FY)$216,196,849 $324,295,273 $432,393,697 $540,492,122 Estimated Current 100% Potential
Refunds-$156,117,452 $234,176,179 $312,234,905 $390,293,631
Remaining Collections (for non-qualifying
MVs)$60,079,396 $90,119,094 $120,158,792 $150,198,491
Estimated Low Additional Refund (15%) ($9,011,909)($13,517,864)($18,023,819)($22,529,774)Estimated High Additional Refund (100%) ($60,079,396)($90,119,094)($120,158,792)($150,198,491) Estimated Refunds for every 1% uptake ($600,794)($901,191)($1,201,588)($1,501,985)Estimated Refunds for every 5% uptake ($3,003,970)($4,505,955)($6,007,940)($7,509,925)
This has the potential to increase the amount of the refunds each year. L.R. No. 0917H.10C
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Motor fuel tax is distributed 73% to the State Road Fund, 15% to the Counties and 12% to the
Cities. If a refund is claimed, the refund is withheld from the distribution in the same
percentage. Therefore the funds would be impacted as follows:
FY 2024FY 2025LowHighLowHighCounties($1,892,501)($12,616,673)($1,892,501)($12,616,673)Cities($2,365,626)($15,770,842)($2,365,626)($15,770,842)Total Local($4,258,127)($28,387,515)($4,258,127)($28,387,515)State Road Fund($11,512,714)($76,751,429)($11,512,714)($76,751,429)FY 2026FY 2027LowHighLowHighCounties($2,433,216)($16,221,437)($2,703,573)($18,023,819)Cities($3,041,519)($20,276,796)($3,379,466)($22,529,774)Total Local($5,474,735)($36,498,233)($6,083,039)($40,553,593)State Road Fund($14,802,061)($98,680,408)($16,446,735)($109,644,898)
The Department already has the forms and processes set up to handle these refunds. No
additional fiscal impact is expected. L.R. No. 0917H.10C
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Summary
This proposal will have the following revenue impact:
Consolidated Impact FY 2024 FY 2025State FundLowHighLowHighGeneral Revenue Charity Deduction($522,607)($522,607)($562,825)($562,825) Creation of the APP($500,000)($500,000) Total General Revenue($1,022,607)($1,022,607)($562,825)($562,825) State Road Fund Standard Refund($70,851,581)($70,851,581)($106,277,371)($106,277,371)Itemized Rebate($513,112)($12,821,146)($171,037)($4,273,715)Weight Limit Removed($11,512,714)($76,751,429)($11,512,714)($76,751,429)Total State Road Fund($82,877,407)($160,424,156)($117,961,123)($187,302,515) Local Funds Counties Standard Refund($11,646,835)($11,646,835)($17,470,253)($17,470,253)Itemized Rebate($84,347)($2,107,586)($28,116)($702,529)Weight Limit Removed($1,892,501)($12,616,673)($1,892,501)($12,616,673)Total Counties($13,623,683)($26,371,094)($19,390,870)($30,789,454) Cities Standard Refund($14,558,544)($14,558,544)($21,837,816)($21,837,816)Itemized Rebate($105,434)($2,634,482)($35,145)($878,161) L.R. No. 0917H.10C
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Weight Limit Removed($2,365,626)($15,770,842)($2,365,626)($15,770,842)Total Cities($17,029,604)($32,963,868)($24,238,587)($38,486,819) Total Local($30,653,287)($59,334,962)($43,629,456)($69,276,273) Consolidated ImpactFY 2026FY 2027State FundLowHighLowHighGeneral RevenueCharity Deduction($600,428)($600,428)($585,960)($585,960)Total General Revenue($600,428)($600,428)($585,960)($585,960)State Road FundStandard Refund($141,703,162)($141,703,162)($177,128,952)($177,128,952)Itemized Rebate($171,037)($4,273,715)$0$0Weight Limit Removed($14,802,061)($98,680,408)($16,446,735)($109,644,898)Total State Road Fund($156,676,260)($244,657,285)($193,575,687)($286,773,850)Local FundsCountiesStandard Refund($23,293,670)($23,293,670)($29,117,088)($29,117,088)Itemized Rebate($28,116)($702,529)$0$0Weight Limit Removed($2,433,216)($16,221,437)($2,703,573)($18,023,819)Total Counties($25,755,002)($40,217,636)($31,820,661)($47,140,907)Cities L.R. No. 0917H.10C
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Standard Refund($29,117,088)($29,117,088)($36,396,360)($36,396,360)Itemized Rebate($35,145)($878,161)$0$0Weight Limit Removed($3,041,519)($20,276,796)($3,379,466)($22,529,774)Total Cities($32,193,752)($50,272,045)($39,775,826)($58,926,134)Total Local($57,948,754)($90,489,681)($71,596,487)($106,067,041)
Officials from the Office of Administration - Budget and Planning (B&P) assume the
following:
This proposal would allow motor fuel tax refund claims on fuel purchased for vehicles heavier
than 26,000 pounds, if such vehicles are owned by a corporation or sole proprietorship located in
Missouri. B&P notes that the language specifically lists corporations and sole proprietors;
therefore, it is unclear whether other pass-through entities such as partnerships or LLCs would
also qualify under this provision.
B&P notes that this proposal would become effective August 28, 2023, which is during the
motor fuel refund request window of July 1, 2023 through September 30, 2023 for fuel tax
purchases between July 2022 and June 2023. For the purpose of this fiscal note, B&P will
assume that refund claims will increase from the repeal of Section 142.822.6 during the FY 2024
refund claim period. However, B&P acknowledges that not all newly qualifying taxpayers
would have kept their fuel receipts because they do not qualify under current law.
B&P further notes that for the TAFP SB 262 (2021) fiscal note, B&P assumed that the amount of
refunds would range between 15% and 100% of all qualified taxpayers, whose vehicles weighed
less than 26,000 pounds. Therefore, under this proposal, B&P assumes that refund claims will
still range between 15% and 100%; however, the number of qualifying vehicles would increase
with the removal of the weight limit. In addition, B&P notes that heavier vehicles tend to use
more motor fuel than lighter vehicles, which may incentivize a higher uptake in refund claims.
Using FY 2022 motor fuel tax collections, B&P estimates that there were 4,323,936,974 gallons
of gasoline and diesel purchased during FY 2022. B&P then updated the TAFP SB 262 (2021)
fiscal estimates for both revenues and potential refunds, under current law, using the newer
gallons sold data. B&P then determined the amount of refunds that could remain after
accounting for all currently qualifying vehicles. Table 1 shows the updated revenue and refund
estimates. L.R. No. 0917H.10C
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Table 1: Estimated Additional Refunds FY 2024FY 2025FY 2026FY 2027Estimated Collections (prior FY)$216,196,849 $324,295,273 $432,393,697 $540,492,122 Estimated Current 100% Potential Refunds-$156,117,452 $234,176,179 $312,234,905 $390,293,631 Remaining Collections (for non-qualifying
MVs)$60,079,396 $90,119,094 $120,158,792 $150,198,491
Estimated Low Additional Refund (15%) ($9,011,909)($13,517,864)($18,023,819)($22,529,774)Estimated High Additional Refund (100%) ($60,079,396)($90,119,094)($120,158,792)($150,198,491) Estimated Refunds for every 1% uptake ($600,794)($901,191)($1,201,588)($1,501,985)Estimated Refunds for every 5% uptake ($3,003,970)($4,505,955)($6,007,940)($7,509,925)
Therefore, B&P estimates that this proposal could increase motor fuel tax refunds by up to $9.0
million to $60.1 million in FY 2024. Once fully implemented, this proposal could increase
motor fuel tax refunds by up to $22.5 million to $150.2 million annually.
However, as noted before, it is unknown how many additional refund claims will be made. B&P
estimates that every 5% increase in refund claims could increase refund amounts by $7.5 million
once fully implemented.
B&P notes that motor fuel tax collections are distributed 73% to the State Road Fund, 12% to the
County Aid Road Trust Fund, 15% to other local funds. Therefore, B&P estimates that this
proposal could reduce revenues to the State Road Fund by up to $6.6 million to $43.9 million
and local revenues by up to $2.4 million to $16.2 million in FY 2024. Once TAFP SB 262
(2021) has fully implemented, this proposal could reduce revenues to the State Road Fund by up
to $22.5 million to $150.2 million and local revenues by $6.1 million to up to $40.6 million
annually. Table 2 shows the estimated impact by fund. L.R. No. 0917H.10C
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Table 2: Estimated Impact By Fund FY 2024FY 2025State FundLow (15%)High (100%)Low (15%)High (100%)State Road Fund($6,578,694)($43,857,959)($9,868,041)($65,786,939) Local Funds CART($1,081,429)($7,209,528)($1,622,144)($10,814,291)Other($1,351,786)($9,011,909)($2,027,680)($13,517,864)Total Local($2,433,215)($16,221,437)($3,649,824)($24,332,155)Table 2 (cont.): Estimated Impact By Fund FY 2026FY 2027State FundLow (15%)High (100%)Low (15%)High (100%)State Road Fund($13,157,388)($87,715,919)($16,446,735)($109,644,898) Local Funds CART($2,162,858)($14,419,055)($2,703,573)($18,023,819)Other($2,703,573)($18,023,819)($3,379,466)($22,529,774)Total Local($4,866,431)($32,442,874)($6,083,039)($40,553,593)
Bill Summary
In response to similar legislation from this year, Perfected HB 519, B&P estimates that this
proposal could decrease state revenues by $95,220,047 to $172,766,796 and local funds by
$35,020,850 to $63,702,525 in FY 2024. Once SB 3(2022) and all other provisions have
implemented, this proposal may decrease state revenues by $194,226,753 to $287,424,916 and
local revenues by $71,596,487 to $106,067,041. Table 1 shows the estimated impact by fiscal
year. L.R. No. 0917H.10C
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Table 1: Estimated Summary Impact FY 2024FY 2025FY 2026State FundLowHighLowHighLowHighGeneral Revenue - Donations($534,043)($576,670)($635,661) State Road Fund Standard Refund($82,660,178)($106,277,371)($153,511,758)Itemized Rebate($513,112)($12,821,146)($171,037)($4,273,715)($171,037)($4,273,715)Weight Limit + Timing($11,512,714)($76,751,429)($11,512,714)($76,751,429)($14,802,061)($98,680,408)Total State Road Fund($94,686,004)($172,232,753)($117,961,122)($187,302,515)($168,484,856)($256,465,881) Total State Impact($95,220,047)($172,766,796)($118,537,792)($187,879,185)($169,120,517)($257,101,542) Local Funds CART Standard Refund($13,587,974)($17,470,253)($25,234,810)Itemized Rebate($84,347)($2,107,586)($28,116)($702,529)($28,116)($702,529)Weight Limit + Timing($1,892,501)($12,616,673)($1,892,501)($12,616,673)($2,433,216)($16,221,437)Total CART($15,564,822)($28,312,233)($19,390,870)($30,789,455)($27,696,142)($42,158,776) Other Standard Refund($16,984,968)($21,837,816)($31,543,512)Itemized Rebate($105,434)($2,634,482)($35,145)($878,161)($35,145)($878,161)Weight Limit + Timing($2,365,626)($15,770,842)($2,365,626)($15,770,842)($3,041,519)($20,276,796)Total Other($19,456,028)($35,390,292)($24,238,587)($38,486,819)($34,620,176)($52,698,469) Total Local($35,020,850)($63,702,525)($43,629,456)($69,276,273)($62,316,317)($94,857,244) L.R. No. 0917H.10C
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Table 1: Estimated Summary Impact FY 2027FY 2028FY 2029State FundLowHighLowHighLowHighGeneral Revenue - Donations($680,003)($665,535)($651,066) State Road Fund Standard Refund($177,128,952)($177,128,952)($177,128,952)Itemized Rebate$0 $0 $0 $0 $0 $0 Weight Limit + Timing($16,446,735)($109,644,898)($16,446,735)($109,644,898)($16,446,735)($109,644,898)Total State Road Fund($193,575,687)($286,773,850)($193,575,687)($286,773,850)($193,575,687)($286,773,850) Total State Impact($194,255,690)($287,453,853)($194,241,222)($287,439,385)($194,226,753)($287,424,916) Local Funds CART Standard Refund($29,117,088)($29,117,088)($29,117,088)Itemized Rebate$0 $0 $0 $0 $0 $0 Weight Limit + Timing($2,703,573)($18,023,819)($2,703,573)($18,023,819)($2,703,573)($18,023,819)Total CART($31,820,661)($47,140,907)($31,820,661)($47,140,907)($31,820,661)($47,140,907) Other Standard Refund($36,396,360)($36,396,360)($36,396,360)Itemized Rebate$0 $0 $0 $0 $0 $0 Weight Limit + Timing($3,379,466)($22,529,774)($3,379,466)($22,529,774)($3,379,466)($22,529,774)Total Other($39,775,826)($58,926,134)($39,775,826)($58,926,134)($39,775,826)($58,926,134) Total Local($71,596,487)($106,067,041)($71,596,487)($106,067,041)($71,596,487)($106,067,041) L.R. No. 0917H.10C
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Oversight does not have information to the contrary and therefore, Oversight will reflect the
estimates as provided by DOR and B&P.
Official from the Missouri Department of Transportation (MoDOT) assume the expansion of
the motor fuel tax refund to motor vehicles that exceed 26,000 pounds would create an unknown
negative fiscal impact if Missouri-based motor carriers licensed under the International Fuel Tax
Agreement (IFTA) are included.
IFTA takes into account both gallons purchased, and gallons consumed within the state when
determining a motor carrier’s fuel tax owed. It is unclear if the language “delivered into a motor
vehicle” is intended to apply to fuel purchased in Missouri, consumed in Missouri, or both.
Because IFTA is administered by MoDOT’s Motor Carrier Services Division and other refunds
are issued by the Department of Revenue, refunds could be issued more than once. The easing of
reporting information for a refund would not satisfy the audit requirements for IFTA.
Allowing only Missouri-based carriers to be eligible for refunds for motor vehicles over 26,000
pounds may create an unfair interstate commerce practice.
MoDOT defers to DOR for the fiscal impacted expected from motor fuel tax refunds.
In response to similar legislation from this year, Perfected HB 519, officials from the Missouri
Department of Conservation assumed the proposal will have no fiscal impact on their
organization. Oversight does not have any information to the contrary. Therefore, Oversight will
reflect a zero impact in the fiscal note for MDC for these provisions of the proposal.
§143.011 Individual Income Tax Rate Reduction
Officials from the Department of Revenue (DOR) notes the current individual income tax rate
for tax year 2023 is 4.95% per SB 3 (2022) and is projected to be 4.8% for tax years 2024 &
2025. Per SB 3, the individual income tax rate is then scheduled to drop over a period of years to
4.5% based on certain state revenue growth. The Department is unable to determine when these
scheduled drops in the rate will actually occur, but for fiscal note purposes only, DOR will
assume they will drop over the next consecutive years.
This provision changes the rate for tax year 2024 to 4.5% and then allows the rest of the SB 3
rate reductions to continue for tax year 2024 and beyond. Therefore, the current and proposed
rates are:
Current and Proposed Income Tax Rates L.R. No. 0917H.10C
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Tax YearCurrent
(assumed) Rate
Proposed Rate20244.8%4.35% (4.5% - .15%)20254.8%4.35%20264.7%4.25%20274.6%4.15%2028+4.5%4.05%
The Department used its internal Income Tax Model that contains confidential taxpayer data to
estimate the fiscal impact. The model calculates the calendar/tax year impact, then converts the
data to fiscal year using a 42% in the first year and 58% in the second year split for conversion.
The loss to General Revenue is projected as follows:
By Tax Year
Tax Year
Loss To
General
Revenue
2024($505,699,033)2025($503,748,664)2026($507,041,169)2027($508,067,496)2028($508,814,511)
By Fiscal Year
Fiscal Year
Loss to General
Revenue
2024($211,574,439)2025($504,879,878)2026($505,131,516)2027($507,472,226)2028($508,381,243)2029($508,814,511)
This provision will require modification to the MO-1040 form and to the MO-1040P form.
Additionally DOR will need to modify their website and their individual income tax computer
system. These changes are estimated to cost $7,193.
At this time, the Department believes it can handle this work with existing resources. However,
should DOR reach the number of errors or correspondence to justify additional FTE from this
proposal or in combination with other proposals that will pass, DOR will seek the required L.R. No. 0917H.10C
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number of FTE through the appropriation process. The Department is providing the number of
errors or correspondence that require additional FTE.
1 FTE Associate Customer Service Rep for every 14,700 errors created
1 FTE Associate Customer Service Rep for every 5,700 pieces of correspondence generated
Officials from the Office of Administration - Budget and Planning (B&P) note this proposal
would reduce the top income tax rate to 4.5% starting tax year 2024. B&P notes that this
proposal retains the income tax reductions that are scheduled to occur under current law.
Based on current revenue forecasts and average revenue growth, B&P estimates that revenues in
FY23, FY25, FY26, and FY27 will reach the SB 3 (2022) growth trigger requirement for
reductions to the top rate of tax. Therefore, the top rate of tax is estimated to be reduced in tax
years 2024 (0.15%), 2026 (0.1%), 2027 (0.1%), and 2028 (0.1%) under SB 3 (2022). Table 1
shows the current versus proposed individual income tax.
Table 1: Current Top Tax
Rate vs Proposed Rate
Tax
YearCurrentProposed
20234.95%N/A20244.80%4.35%20254.80%4.35%20264.70%4.25%20274.60%4.15%20284.50%4.05%*Assumes SB 3 (2022)
reductions are triggered
for tax years: 2024, 2026,
2027, and 2028.
Using tax year 2020 data, the most recent complete tax year available, and accounting for the
changes in individual income tax law created by SB 3 (2022), B&P estimates that this section
may reduce tax collections by $514.7M for calendar year 2024. Once SB 3 (2022) has fully
implemented, B&P estimates this provision could reduce tax collections by $517.9M annually.
Table 2 shows the assumed top tax rates and estimate impact by calendar year. L.R. No. 0917H.10C
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Table 2: Impact by Tax
Year
Tax
Year
GR Impact
2024($514,725,108)2025($512,772,465)2026($516,077,095)2027($517,108,521)2028($517,857,688)
However, because this proposal would take effect January 1, 2024 individuals will adjust their
withholdings and declarations during FY24. Based on actual collections data, B&P estimates
that 42% of individual income taxes are paid during fiscal year 1 and 58% are paid during fiscal
year 2. Therefore, B&P estimates that this provision will reduce TSR and GR by $216.2M in
FY24. Once SB 3 (2022) has been fully implemented in FY29, and annually thereafter, this
proposal may reduce TSR and GR by $517.9M. Table 3 shows the estimated impact from this
section by fiscal year.
Table 3: Impact by Fiscal
Year
Fiscal
Year
GR Impact
2024($216,184,545)2025($513,904,998)2026($514,160,410)2027($516,510,294)2028($517,423,171)2029($517,857,688)
Section 143.071 Corporate Income Tax Rate Reduction
Officials from the Department of Revenue (DOR) note the current corporate tax rate is 4% a
year. The FY 2022 net collections were $711.1 million. Starting January 1, 2024, this proposal
will reduce the corporate tax rate to 2% for tax year 2024. Since this proposal is effective
January 1, 2024 it is assumed only 6 months of collections will be impacted in FY 2024.
Then starting in tax year 2026, this proposal provides that another 1% reduction can occur if the
amount of revenue received in FY 2025- 2026 exceeds the FY 2024-2025 collections by $50
million. If it does, the 1% rate reduction will occur starting the following tax year. Therefore,
the earliest this reduction could occur is tax year 2027. L.R. No. 0917H.10C
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Additionally in Section 143.071.6, this proposal establishes a procedure by which the corporate
tax rate could be reduced to zero. It says that if the FY 2028 net general revenue collections are
greater than $250 million over the FY 2027 net general revenue collections then the corporate
rate will be reduced to zero. At this time, the Department is unable to predict if reducing the
corporate rate to 1% would increase revenue by the $250 million for the trigger.
This provision then allows a final reduction to 0% if it meets the $250 million trigger. This will
result in a loss to general revenue.
FY 2024FY 2025FY 2026FY 2027FY 2028FY 2029Corporate
Rate
Reduction
($177,765,669)($355,531,338)(355,531,338)($444,414,173)($533,297,007)($711,062,676)
This provision in Section 143.071.8(1) states that upon the corporate tax rate being eliminated,
corporations would no longer be allowed to claim tax credits. Many of the state tax credits are
allowed to be sold, transferred and assigned and it is assumed corporations would continue that
practice. Additionally, some companies may choose to no longer participate in tax credit
programs, freeing up credits for other organizations to claim.
Per Section 148.720 whenever there is a reduction in the corporate tax rate there shall be a
proportional decrease in the financial institutions tax. However, section 143.071.8(2) states this
proposal will not cause a reduction or elimination of the financial institutions tax under Chapter
148. Therefore this provision will not have a fiscal impact.
This provision will result in changes needing to be made to computer programs and forms.
These changes are estimated at $7,193.
Officials from the Office of Administration - Budget and Planning (B&P) note Section
143.071.4 will reduce the corporate income tax 2%, starting with tax year 2024.
Section 143.071.5 would reduce the corporate income tax rate by an additional 1%, when net
corporate income tax collections exceed the amount of net corporate income tax collections in
FY25. B&P notes that because the rate reduction could not start until the calendar year after the
trigger was met, tax year 2027 (FY26 vs FY25 corporate revenues) is the first possible year for
the reduced rate. For the purpose of this fiscal note, B&P will assume the reduction is triggered
for tax year 2027.
Section 143.071.6 would allow an additional 1% reduction, taking the corporate tax rate to 0%,
beginning as early as the year after a reduction is triggered under subsection 5. In order for the
additional rate reduction to occur, net GR in the immediately preceding fiscal year must exceed
the net GR in the fiscal year in which the tax reduction under subsection 5 is triggered, by at least
$250 million. For the purpose of this fiscal note, B&P will assume that the additional rate
reduction occurs as early as tax year 2028. L.R. No. 0917H.10C
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Table 4 shows the proposed corporate tax rates.
Table 4: Proposed
Corporate Tax Rate
Tax
YearCurrentProposed
20234.00%N/A20244.00%2.00%20254.00%2.00%20264.00%2.00%20274.00%1.00%20284.00%0.00%*Assume Section
143.071.5 triggered for tax
year 2027.
Assumes Section
143.071.6 triggered for tax
year 2028.
B&P notes that under Section 148.720, RSMo, the financial institutions tax (formerly known as
the bank franchise taxes) (Sections 148.030, 148.140, and 148.620, RSMo.) shall be reduced by
a proportional amount to any reduction in the corporate income tax. However, Section
143.071.8(2) states that the proposed tax rate reductions and elimination under Section 143.071
shall not impact the financial institutions tax.
In FY22, net corporate tax collections were $711,062,676 at a tax rate of 4.0%.
B&P estimates that reducing the corporate income tax could reduce GR by $355.5 million
beginning with tax year 2024. Once fully implemented, B&P estimates this provision could
reduce corporate income tax collections by $711.0 million annually. Table 5 shows the
estimated impact by tax year.
Table 5: Estimated
Impact by Tax Year
Tax
YearGR Impact
2024($355,531,338)2025($355,531,338)2026($355,531,338)2027($533,297,007)2028($711,062,676) L.R. No. 0917H.10C
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* Assume Section
143.071.5 triggered
for tax year 2027.
Assumes Section
143.071.6 triggered
for tax year 2028. L.R. No. 0917H.10C
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However, because this proposal would take effect January 1, corporations would adjust their
declarations payments during FY24. Based on historic remittance patterns, B&P notes that
corporate income tax collections are split approximately 50/50 between fiscal years. Table 6
shows the estimate impact on general revenue by fiscal year.
Table 6: Corporate
Income Tax Reduction
by Fiscal Year
Fiscal
YearGR Impact
FY24($177,765,669)FY25($355,531,338)FY26($355,531,338)FY27($444,414,173)FY28($622,179,842)FY29($711,062,676)* Assume Section
143.071.5 triggered for
tax year 2027.
Assumes Section
143.071.6 triggered for
tax year 2028.
Therefore, B&P estimates that this proposal could reduce TSR and GR by $177.8 million in
FY24. Once fully implemented, this proposal could reduce TSR and GR by $711.0 million
annually.
B&P notes that Section 143.071.8(1) would prevent the use of corporate tax income tax credits
once the corporate income tax has been eliminated. B&P notes that the average amount of tax
credits taken against corporate income tax was $92,343,664 from FY20 – FY22. However, B&P
also notes that corporations could still sell or transfer tax credits. B&P further assumes that this
would not impact withholding retention tax credits as they are not taken against corporate
income tax, but are instead a retention of employee’s individual income tax.
In addition, the use of net collections to estimate the potential impact from this proposal already
includes the potential that corporate tax credits would no longer be redeemed. Therefore,
removing the $92.3 million in corporate tax credits from the estimated impact would double
count the potential revenue gain. L.R. No. 0917H.10C
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Section 143.125 Social Security Benefit Tax Exemption
Officials from the Department of Revenue (DOR) note this provision is changing the taxability
of social security payments. Some social security benefits are taxable depending on the amount
of income a person has at the federal level, while other amounts are not. Generally, at the federal
level if a taxpayer’s income is under $25,000 and they file as an individual or $35,000 if they file
a combined return, the social security benefits are not taxable. For any income over those
amounts then social security benefits are taxable and the taxable portion is calculated into the
taxpayer’s federal adjusted gross income (FAGI).
Under Missouri law, if social security benefits are included in a taxpayer’s FAGI, and the
taxpayer’s MAGI is over $85,000 for an individual or $100,000 for those that file combined,
their social security is taxable in Missouri. If a taxpayer has a MAGI of less than $85,000 for an
individual or $100,000 for those filing combined, then they are allowed to deduction up to the
social security maximum from their Missouri taxable income.
The maximum social security benefits a person receives is based on when they start to take the
social security benefits and how much they paid into the system through the years. A person can
take early social security benefits at 62 receiving a lesser amount of benefits. Social security
benefits are considered full benefits starting at age 67, based on the year of a person’s birth. The
maximum social security benefits are given when a person does not take social security until
they reach 70. The maximum social security benefit for 2023 is $43,524. It should be noted that
social security annually adjusts the benefit numbers.
This provision starting January 1, 2024, will remove the MAGI limitation determining the
taxable portion of social security. If a taxpayer included any portion of their social security
benefits into their FAGI they will be allowed a deduction from their Missouri return up to the
$43,524 limit of what they claimed in the FAGI.
While currently SB 3 adopted in 2022 set the individual income tax rate at 4.95% in tax year
2023 with the rate scheduled to continue to reduce over a period of several year, this bill is
changing those rates. For fiscal note purposes, DOR will show the loss at each of this year’s
individual income tax rates for the implementation period. This will result in a loss to general
revenue. DOR estimates the loss to general revenue: L.R. No. 0917H.10C
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Estimated Loss of Social Security BenefitsRetirement
Income4.50%4.35%4.25%4.15%4.05%
Social
Security($144,686,314)($139,863,436)($136,648,185)($133,432,934)($130,217,682)
Therefore, it could result in a loss to general revenue.
Table 2: Estimated Loss by Fiscal Year of Social Security Benefits Tax Year (Fiscal Year)Tax Rate2024 (FY25)2025 (FY26)2026 (FY27)2027 (FY28)4.50%($144,686,314)($144,686,314)($144,686,314)($144,686,314)4.35%($139,863,436)($139,863,436)($139,863,436)($139,863,436)4.25% ($136,648,185)($136,648,185)($136,648,185)4.15% ($133,432,934)($133,432,934)4.05% ($130,217,682)
This provision will require modification to the MO-1040, MO-A, and the MO-1040P forms.
Additionally DOR will need to modify their website and their individual income tax computer
system. These changes are estimated to cost $7,193.
At this time, the Department believes it can handle this work with existing resources. However,
should DOR reach the number of errors or correspondence to justify additional FTE from this
proposal or in combination with other proposals that will pass, DOR will seek the required
number of FTE through the appropriation process. The Department is providing the number of
errors or correspondence that require additional FTE.
1 FTE Associate Customer Service Rep for every 14,700 errors created
1 FTE Associate Customer Service Rep for every 5,700 pieces of correspondence generated
Officials from B&P - This section would eliminate the income limits for the individual income
tax exemption for social security payments beginning with tax year 2024. Currently taxpayers
who are married filing joint may exempt 100% of their social security income, if their Missouri
Adjusted Gross Income (MAGI) equal to or less than $100,000. All other taxpayers may exempt
100% of social security income if their MAGI is equal to or less than $85,000.
This proposal would allow all taxpayers, regardless of income, to subtract up to the maximum
social security benefit. To prevent double counting the potential revenue impact, B&P will
reflect the potential impact under the proposed income tax brackets found in Section 143.011.
Based on data published by the IRS, B&P estimates that this section may exempt $689,197,344
in social security payments for taxpayers filing single, $172,665,756 for taxpayers filing head of L.R. No. 0917H.10C
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household, and $2,353,388,312 for married filing joint taxpayers; for a total of $3,215,251,412 in
income exempted under this section.
However, exemptions do not reduce revenues on a dollar for dollar basis, but rather in proportion
to the top tax rate applied. Therefore, B&P will show the estimated impacts throughout the
implementation of the tax rate reductions from this proposal and SB 3 (2022).
B&P estimates that this section could reduce TSR and GR by $144,686,314 (top tax rate 4.5%)
or by $139,863,436 (top tax rate 4.35%) in FY25. Once this proposal and SB 3 (2022) have fully
implemented, this section could reduce TSR and GR by $130,217,682 annually.
Table 7: Social Security Subtraction by Fiscal Year Tax Year (Fiscal Year)Tax
Rate2024 (FY25)2025 (FY26)2026 (FY27)2027 (FY28)
4.50%($144,686,314)($144,686,314)($144,686,314)($144,686,314)4.35%($139,863,436)($139,863,436)($139,863,436)($139,863,436)4.25% ($136,648,185)($136,648,185)($136,648,185)4.15% ($133,432,934)($133,432,934)4.05% ($130,217,682)
Responses regarding the proposed legislation as a whole for §§143.011, 143.071 & 143.125
In response to similar legislation from this year, Perfected HCS for HB Nos. 816 & 660,
officials from the DOR noted this proposal will impact general revenue, from the income tax rate
changes, the corporate tax rate changes, and the increased social security exemption. This is
estimated to result in a loss.
Impact to State & Local Funds FY 2024FY 2025FY 2026State Funds General Revenue($529,203,544)($1,000,274,652)($997,311,039) FY 2027FY 2028FY 2029State Funds General Revenue($1,085,319,333)($1,171,895,932)($1,172,329,200)
Oversight will note the one-time cost, estimated at $21,579 associated with the updates of
DOR’s income tax system for all sections within the proposal, in the fiscal note beginning FY
2024. L.R. No. 0917H.10C
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In response to similar legislation from this year, Perfected HCS for HB Nos. 816 & 660, B&P
estimated that this proposal could TSR and GR by $533,813,650 in FY24. Once the individual
and corporate income tax changes have fully implemented, this proposal may reduce TSR and
GR by $1,181,372,377. Table 8 shows the estimated impact by provision and fund.
Table 8: Summary ImpactState FundsFY 2024FY 2025FY 2026General Revenue Individual Income Tax*($216,184,545)($513,904,998)($514,160,410)Corporate Income Tax**($177,765,669)($355,531,338)($355,531,338)Social Security Subtraction*($139,863,436)($139,863,436)($136,648,185)Total GR Impact($533,813,650)($1,009,299,772)($1,006,339,933) Total State Revenue Impact($533,813,650)($1,009,299,772)($1,006,339,933)*Assumes SB 3 (2022) reductions are triggered for tax years: 2024, 2026, 2027, and
2028.
**Assume Section 143.071.5 triggered for tax year 2027.
Assumes Section 143.071.6 triggered for tax year 2028.
Table 9: Summary ImpactState FundsFY 2027FY 2028FY 2029General Revenue Individual Income Tax*($516,510,294)($517,423,171)($517,857,688)Corporate Income Tax**($444,414,173)($622,179,842)($711,062,676)Social Security Subtraction*($133,432,934)($130,217,682)($130,217,682)Total GR Impact($1,094,357,400)($1,269,820,694)($1,359,138,046) Total State Revenue Impact($1,094,357,400)($1,269,820,694)($1,359,138,046)*Assumes SB 3 (2022) reductions are triggered for tax years: 2024, 2026, 2027, and
2028.
**Assume Section 143.071.5 triggered for tax year 2027.
Assumes Section 143.071.6 triggered for tax year 2028.
Oversight is unsure when the two triggers for the corporate income tax reduction would occur.
For simplicity, Oversight will show them as fully implemented in an unknown fiscal year.
§321.246 – Emergency Services
Officials from the Office of Administration - Budget and Planning (B&P) note §321.246.1 of
the proposal updates this statute to reflect Clay County’s new standing as a charter county. The
proposal corrects the reference to first class counties and counties with a charter form of
government. The first two county changes identify Jackson County with the reference to the
“county with a charter form of government” and removes “of the first classification”. The L.R. No. 0917H.10C
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updated reference intended for Clay County now reads as “a county with a charter form of
government” and removes “of the first classification”.
Officials from the Office of Administration - Budget and Planning (B&P) note §321.246.4 of
the proposal removes the word “district” from the name of fire protection sales tax trust fund,
which aligns the name with the statutory name in section 321.242.
B&P defers to the fire protection districts for the fiscal impact.
In response to similar legislation from this year, HCS for HB 648, officials from the
Department of Revenue (DOR) noted this is updating a jurisdictions description in statute. This
will not have a fiscal impact on DOR.
In response to similar legislation from this year, HCS for HB 648, officials from the City of
Kansas City and Jackson County each assumed the proposal will have no fiscal impact on their
respective cities/counties. Oversight does not have any information to the contrary. Therefore,
Oversight will reflect a zero impact in the fiscal note for these agencies for this section of the
proposal.
In response to similar legislation from this year, HCS for HB 648, officials from the City of
Springfield assumed the proposal will have no fiscal impact on their organization. Oversight
does not have any information to the contrary. Therefore, Oversight will reflect a zero impact in
this section of the fiscal note.
§408.900 – Digital Mining
Officials from the Office of Administration - Budget and Planning assume this proposal
would allow anyone to run a node or series of nodes for the purpose of home digital asset
mining. While the Public Service Commission can set rates reflective of cost to serve, they
cannot establish a rate schedule for digital asset mining that is discriminatory. However, the
provisions of this section do not have a fiscal impact on GR or TSR.
In response to similar legislation from this year, SB 536, officials from the City of Kansas City
and the each assumed the proposal will have no fiscal impact on their
respective organizations. Oversight does not have any information to the contrary. Therefore,
Oversight will reflect a zero impact in the fiscal note for these agencies for this section of the
proposal.
Responses regarding the proposed legislation as a whole
Officials from the Department of Commerce and Insurance, the Department of Natural
Resources, the Missouri Highway Patrol, the Office of Administration, the Platte County
Board of Elections, the St. Louis County Board of Elections and the Joint Committee on
Administrative Rules each assume the proposal will have no fiscal impact on their respective L.R. No. 0917H.10C
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organizations. Oversight does not have any information to the contrary. Therefore, Oversight
will reflect a zero impact in the fiscal note for these agencies.
FISCAL IMPACT –
State Government
FY 2024
(10 Mo.)
FY 2025FY 2026Fully
Implemented
(FY Unknown)
GENERAL REVENUE
Costs – State Tax
Commission – §137.115
– Software/programming
and additional FTE costs
p. 5-8
(Unknown,
less than
$200,000)
(Unknown, less
than $200,000)
(Unknown,
less than
$200,000)
(Unknown, less
than $200,000)
Loss – decrease in state
taxes paid due to the
ability to donate motor
fuel tax refunds to
charity and claim as a
deduction on state taxes
(§§142.815, 142.822 &
142.824) p. 15($106,809)($115,334)($127,132)($136,001)
Costs – §144.020 - DOR
– sales tax computer
updates p.44($21,579)$0$0$0
Revenue Reduction -
§143.071 - Individual
Income Tax Rate
Reduction p. 38-41($211,574,439)($504,879,878)($505,131,516)($508,381,243)
Revenue Reduction -
§143.071 - Corporate
Income Tax Rate
Reduction p. 38-41($177,765,669)($355,531,338)($355,531,338)($711,062,676)
Revenue Reduction -
§143.125 Social Security
($139,863,436)($139,863,436)($136,648,185) L.R. No. 0917H.10C
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Benefit Tax Exemption
p. 42-46
($133,432,934)
ESTIMATED NET
EFFECT ON
GENERAL REVENUE($529,531,932)
(Unknown, less
than
$1,000,589,986)
(Unknown,
less than
$997,638,171)
(Unknown, less
than
$1,353,212,854)
BLIND PENSION
FUND
Revenue Reduction -
§137.115.9 – motor
vehicles - reduction in
property taxes from
change in personal
property assessed
valuation method p.5-8$0
More or Less
than
($1,169,311)
More or Less
than
($1,288,384)
More or Less
than
($1,288,384)
Revenue Change -
§137.115.9 – farm
machinery - reduction in
property taxes from
change in personal
property assessed
valuation method p.5-8$0
More or Less
than ($28,909)
More or Less
than ($31,805)
More or Less
than ($31,805)
ESTIMATED NET
EFFECT ON BLIND
PENSION FUND$0
More or Less
than
($1,198,220)
More or Less
than
($1,320,189)
More or Less
than
($1,320,189)
STATE ROAD FUNDCost – DOR –
development of app to
claim motor fuel tax
refunds at the pump
(§142.822) p.19
Could exceed
($500,000)$0$0$0
Cash Flow – timing of
the motor fuel tax L.R. No. 0917H.10C
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refunds – moved up to
CY instead of FY p. 10
($513,112 to
$12,821,146)
($171,037 to
$4,273,715)
($171,037 to
$4,273,715)
$0
Loss – increase in fuel
tax refunds due to
eliminating certain
required p. information
(§142.822) (Unknown)(Unknown)(Unknown)(Unknown)
Loss – increased motor
fuel tax refunds due to
the elimination of the
weight limit for vehicles
to claim refunds
(§142.822) p. 26
($11,512,714
to
$76,751,429)
($11,512,714 to
$76,751,429)
($14,802,061
to
$98,680,408)
($16,446,735 to
$109,644,898)
Loss – taxpayers
claiming the standard
refund vs. the itemized
refund p. 32($82,660,178)($106,277,371)($153,511,758)($177,128,952)
ESTIMATED NET
EFFECT ON THE
STATE ROAD FUND
(Unknown,
could exceed
$95,186,004 to
$172,732,753)
(Unknown,
could exceed
$117,961,122 to
$187,302,515)
(Unknown,
could exceed
$168,484,856
to
$256,465,881)
(Unknown,
could exceed
$193,575,690 to
$286,773,850)
FISCAL IMPACT –
Local Government
FY 2024
(10 Mo.)
FY 2025FY 2026Fully
Implemented
(FY Unknown)
LOCAL POLITICAL
SUBDIVISIONS
Costs – Counties –
§137.115 - to administer
the changes in
assessment from this
proposal p. 5-8$0$0(Unknown)(Unknown)
Revenue Reduction -
§137.115.9 – motor
vehicles - reduction in $0
More or Less
than
($333,994,687)
More or Less
than
($367,454,133)
More or Less
than
($367,454,133) L.R. No. 0917H.10C
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property taxes from
change in personal
property assessed
valuation method p. 5-8
Revenue Reduction -
§137.115.9 – farm
machinery - reduction in
property taxes from
change in personal
property assessed
valuation method p. 5-8$0
More or Less
than
($8,230,682)
More or Less
than
($9,055,276)
More or Less
than
($9,055,276)
Cash Flow – (Cities and
Counties) timing of the
motor fuel tax refunds
(§142.822) p. 11 & 13
($189,781 to
$4,742,068)
($63,261 to
$1,580,690)
($63,261 to
$1,580,690)$0
Loss – (Cities and
Counties) increase in
fuel tax refunds due to
eliminating certain
required information
(§142.822) (Unknown)(Unknown)(Unknown)(Unknown)
Loss – taxpayers
claiming the standard
refund vs. the itemized
refund ($30,572,942)($39,308,069)($56,778,322)($65,513,488)
Loss – increase in motor
fuel tax refunds due to
eliminating the weight
limit restriction p.26
($4,258,127 to
$28,387,515)
($4,258,127 to
$28,387,515)
($5,474,735 to
$36,498,233)
($6,083,039 to
$40,553,593)
ESTIMATED NET
EFFECT ON LOCAL
POLITICAL
SUBDVISIONS
Could exceed
($35,020,850
to
$63,702,525)
Could exceed
($385,854,826
to
$411,501,643)
Could exceed
($438,825,727
to
$471,366,654)
Could exceed
($448,169,197
to
$484,157,180)
FISCAL IMPACT – Small Business
Small businesses could be positively impacted by several provision in the bill. L.R. No. 0917H.10C
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FISCAL DESCRIPTION
§137.115 – Motor Vehicle Assessment Valuations
This legislation modifies provisions relating to motor vehicle assessment valuations.
§§142.815, 142.822 & 142.824 – Motor Fuel Tax Exemption
This proposal modifies provisions relating to motor fuel tax exemption.
§§143.011, 143.071 & 143.125
Currently, the rate of tax imposed on the highest bracket of income is 4.95%. Beginning January
1, 2024, this bill lowers the top rate to 4.5%.
Currently, there is a 4% rate of tax imposed on corporate income. Beginning January 1, 2024,
this bill lowers the rate of taxation on corporate income to 2%.
Beginning 2025, a further reduction of 1% to corporate income tax may be made if the amount of
revenue from corporate income tax collected in the immediately preceding fiscal year exceeds
the highest amount of revenue from corporate income tax collected in any fiscal year prior to the
immediately preceding fiscal year by at least $50 million. Such a reduction shall only be made
once and shall continue in effect for all subsequent years.
Beginning January 1, 2024, any Social Security benefits received by a taxpayer, regardless of
age, including retirement, disability, survivors, and supplemental benefits shall be entitled to the
maximum exemption available regardless of the taxpayer's filing status or the amount of the
taxpayer's Missouri adjusted gross income.
Sections 137.073, 137.115 & 138.060 of the proposal have an emergency clause.
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
City of Kansas City
Department of Revenue
Missouri Department of Transportation
City of Springfield
Department of Natural Resources
Missouri Highway Patrol
Office of Administration
Platte County Board of Elections
St. Louis County Board of Elections L.R. No. 0917H.10C
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Joint Committee on Administrative Rules
State Tax Commission
Office of the Secretary of State
Newton County Health Department
Jackson County Board of Elections
Lincoln County Assessor
Office of Administration - Budget and Planning
Department of Social Services
Cape Girardeau County Assessor
County Employees’ Retirement Fund
Missouri Department of Conservation
Department of Commerce and Insurance
Jackson County
Julie MorffRoss StropeDirectorAssistant DirectorApril 18, 2023April 18, 2023