Modifies provisions relating to personal income tax and removes the additional revenue trigger rate reductions
The modifications under HB 2587 are expected to have a substantial effect on the state's tax structure, particularly concerning how taxable income is defined and treated. By establishing a straightforward tax rate that applies immediately from 2023, the bill seeks to simplify the tax code for residents. Additionally, any future reductions in tax rates will now also be contingent upon the state’s net general revenue exceeding specific thresholds, which may create more predictable financial planning for both taxpayers and the state treasury. However, this aspect could allow for fewer tax decreases in tougher economic times, potentially limiting immediate financial relief for residents.
House Bill 2587 proposes significant modifications to the existing personal income tax structure in Missouri. The bill repeals Sections 143.011 and 143.021 of the Revised Statutes of Missouri and enacts two new sections that outline the revised tax brackets and rates for Missouri residents. This legislative change is aimed at adjusting how personal income tax is calculated and implemented, with a particular focus on altering rates applicable to different income levels. Specifically, the bill raises the top rate of tax to 4.95% beginning January 1, 2023, intending to ensure residents are taxed appropriately based on their income bracket while eliminating prior thresholds and conditions for tax rate reductions.
Discussions surrounding HB 2587 have revealed some notable points of contention among legislators and stakeholders. Critics argue that making upward adjustments to tax rates, especially without certain revenue triggers, could disproportionately affect middle- and lower-income residents. There are concerns that raising the tax rates might not be conducive to economic growth or support needed for fragile economic conditions. Proponents, however, believe that the reform is crucial for establishing a fair tax system that can generate adequate state revenue while simplifying the overall process for taxpayers.