COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:2950H.01P Bill No.:Perfected HB 1713 Subject:Taxation and Revenue - Income; Taxation and Revenue - General; Tax Incentives;
Military Affairs; Veterans; Revenue, Department of Revenue
Type:Original Date:March 6, 2024Bill Summary:This proposal modifies provisions relating to income tax deductions for
enlistment bonuses paid to members of the armed forces.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2025FY 2026FY 2027General Revenue(Unknown)(Unknown)(Unknown)Total Estimated Net
Effect on General
Revenue(Unknown)(Unknown)(Unknown)
*Oversight notes that based on information provided by the DOR, the majority of military
signing bonuses included in this proposal should be included under the existing income tax
deductions. Therefore, Oversight assumes the fiscal impact to the General Revenue Fund would
not reach the $250,000 threshold.
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2025FY 2026FY 2027Total Estimated Net
Effect on Other State
Funds $0$0$0
Numbers within parentheses: () indicate costs or losses. L.R. No. 2950H.01P
Bill No. Perfected HB 1713
Page 2 of
March 6, 2024
KLP:LR:OD
ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2025FY 2026FY 2027Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2025FY 2026FY 2027Total Estimated Net
Effect on FTE 000
☐ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☐ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND AFFECTEDFY 2025FY 2026FY 2027Local Government$0$0$0 L.R. No. 2950H.01P
Bill No. Perfected HB 1713
Page 3 of
March 6, 2024
KLP:LR:OD
FISCAL ANALYSIS
ASSUMPTION
Sections 143.174 & 143.175 Military Income Tax Deduction
Officials from the Department of Revenue (DOR) note members of the military can deduct
100% of the income they receive as salary or compensation if that income is taxable at the
federal level from the calculation of their Missouri adjusted gross income when calculating their
taxable income. This is the military income deduction. Additionally, they can receive the
deduction for income received from certain training programs. This proposal is adding to this
Missouri military income deduction, income they receive from signing bonuses.
The Department found that the military does issue signing bonuses to soldiers based on their
branch of service, length of enlistment and specific job specialties. The more specialized the job
the more likely to be issued a signing bonus. DOR also found that signing bonuses are often
paid out over a number of years rather than a single lump sum.
The federal government designates certain military pay and benefits as taxable. Information
found by the Department, indicates that all income received by members of the military serving
in a combat zone is tax free at the federal level, which includes their signing bonuses.
Additionally, depending on their rank a portion of non-combat pay may be tax exempt.
The Department notes that while Missouri is home to Whiteman Air Force Base, Fort Leonard
Wood and Fort Crowder, DOR is unable to determine how many of the soldiers stationed there
are eligible for signing bonuses. DOR is also not able to determine how many of them actually
file returns as a Missouri resident.
The Department is unable to locate any single source that can tell how much is paid to soldiers
filing Missouri individual income tax returns and the amount of signing bonuses they receive that
would be taxable. DOR assumes that should a soldier filing a Missouri return receive a taxable
signing bonus they would qualify for this deduction and that income would be excluded from tax
per this proposal. DOR notes this proposal could result in an unknown loss to general revenue,
but assumes it would be minimal.
Officials from the Office of Administration - Budget and Planning (B&P) assume this
proposal clarifies that military signing bonuses are to be included within the definition of
“compensation” for both active duty and, reserve duty, and National Guard income tax
exemptions. B&P further notes that based on information provided by DOR, the majority of such
bonuses should already be included under the existing income tax deductions.
Therefore, if this proposal extends the deductions to additional bonuses not already excluded,
this proposal could result in an unknown, likely minimal, loss to TSR and GR. L.R. No. 2950H.01P
Bill No. Perfected HB 1713
Page 4 of
March 6, 2024
KLP:LR:OD
Oversight notes the amount of military sign on bonuses varies by service branch, education
level, civilian experience, specific job specialty, and length of enlistment contract. Oversight
notes the following bonus amounts:
BranchEnlistment BonusNavy$5,000 to $50,000ArmyUp to $50,000Air Force$3,000 to $20,000National GuardUp to $20,000Coast Guard $15,000 to $50,000Marines$5,000 to $9,000
Oversight notes that according to U.S. Army Recruiting Command 16,512 army recruits
received an average bonus of $14,100 and 6,943 army reserve with an average bonus of $9,800
in fiscal year 2022.
Oversight notes according to the Department of Defense, only 1.3% of the 15,000 active-duty
military members of Missouri reside in the state.
Oversight is unable to determine the number of recruits who file a Missouri income tax return
and further the amount of the bonus received. Based on the number of potential qualifiers of the
bill and based on information provided by DOR, the majority of such bonuses should already be
included under the existing income tax deductions; Oversight assumes the fiscal impact will not
reach the $250,000 threshold.
Officials from the Missouri National Guard 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 this organization.
FISCAL IMPACT – State GovernmentFY 2025
(10 Mo.)
FY 2026FY 2027GENERAL REVENUERevenue Reduction - §143.174 &
§143.175 - Military Income Tax
Deduction(Unknown)(Unknown)(Unknown)
ESTIMATED NET EFFECT ON
GENERAL REVENUE(Unknown)(Unknown)(Unknown) L.R. No. 2950H.01P
Bill No. Perfected HB 1713
Page 5 of
March 6, 2024
KLP:LR:OD
FISCAL IMPACT – Local GovernmentFY 2025
(10 Mo.)
FY 2026FY 2027$0$0$0
FISCAL IMPACT – Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
FISCAL DESCRIPTION
Current law authorizes an income tax deduction for active and reserve members of the Armed
Forces for a percentage of such taxpayer's income received as salary or compensation as a
member of the Armed Forces. This bill provides that the term "salary or compensation" shall
include any signing bonus.
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
Department of Revenue
Office of Administration - Budget and Planning
Missouri National Guard
Julie MorffRoss StropeDirectorAssistant DirectorMarch 6, 2024March 6, 2024