+COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:2548H.01I Bill No.:HB 1162 Subject:Taxation and Revenue - General; Taxation and Revenue - Sales and Use; Tax
Incentives; Department of Revenue; Counties; Cities, Towns, and Villages
Type:Original Date:February 25, 2025Bill Summary:This proposal modifies provisions relating to local sales tax law exemptions.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND AFFECTEDFY 2026FY 2027FY 2028General Revenue$264,485$352,646$352,646Total Estimated Net
Effect on General
Revenue$264,485*$352,646$352,646
*The positive amount above represents the potential 1% collection fee collected by DOR.
** The estimated fiscal impact for fiscal year 2026 is lesser because FY 2026 is a partial year (9
months).
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Total Estimated Net
Effect on Other State
Funds $0$0$0
Numbers within parentheses: () indicate costs or losses. L.R. No. 2548H.01I
Bill No. HB 1162
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February 25, 2025
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND AFFECTEDFY 2026FY 2027FY 2028Total Estimated Net
Effect on All Federal
Funds $0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND AFFECTEDFY 2026FY 2027FY 2028Total 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 2026FY 2027FY 2028Local Government$26,183,945* $34,911,927 $34,911,927
* The estimated fiscal impact for fiscal year 2026 is lesser because FY 2026 is a partial year (9
months). L.R. No. 2548H.01I
Bill No. HB 1162
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February 25, 2025
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FISCAL ANALYSIS
ASSUMPTION
Section 144.054 - Local Sales Tax Exemptions
Officials from the Office of Administration - Budget and Planning (B&P) note beginning
August 28, 2025, this proposal would reinstate local sales tax on manufacturing activities. B&P
notes that SB 153 (2021) exempted manufacturing activity from local sales tax as part of
simplifying the sales tax code in preparation of online use tax.
In tax year 2022, the last year local taxes were collected on manufacturing activities,
$35,264,573 was collected. B&P notes that DOR is allowed to retain 1% for collection costs.
Therefore, B&P estimates that this proposal could increase GR by $264,484 and local sales tax
collections by $26,183,946 in FY26. Once fully implemented, this proposal could increase GR
by $352,646 and local sales tax collections by $34,911,927 annually.
Officials from the Department of Revenue (DOR) note in 2021 with the passage of SB 153,
manufacturing activity was exempted from local sales tax. It was previously only exempted
from the state sales tax. This proposal starting August 28, 2025, would again require the payment
of the local sales tax on manufacturing activity.
The last year this local tax was collected was tax year 2022. DOR records indicate the receipt of
$35,264,573 in local sales tax. DOR notes that when collecting sales or use tax, DOR is able to
retain 1% to cover the department’s collection costs.
Sales tax is remitted one month behind collection. Therefore, with an effective date of August
28, 2025, DOR assumes only 9 months of collection in FY 2026.
Fiscal YearDOR 1% feeLocals sales tax2026$264,485$26,183,9452027+$352,646$34,911,927
This will require DOR to modify the department’s forms ($2,200), DOR’s website and its
computer system with its distribution program ($10,000).
Oversight notes DOR requests a one-time cost for form and computer updates to comply with
the proposed language; however, Oversight notes that DOR receives appropriation for routine
updates and will not show those costs in the fiscal note.
Officials from the City of Kansas City assume the proposed legislation has a potential positive
fiscal impact of an indeterminate amount. L.R. No. 2548H.01I
Bill No. HB 1162
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February 25, 2025
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Officials from the City of O’Fallon assume this would increase revenue for O’Fallon by
approximately $30,000 per year.
Officials from the Ste. Genevieve County Treasurer note the county has experienced a
significant loss in sales tax revenue because of the local sales tax exemption.
The exemption started the year 2023, so the county compared the year 2022 when the exemption
was not in place to the year 2024 when the exemption was in place the entire year.
Comparing the year 2022 to the year 2024 there was a decrease of approximately $1,235,000 in
sales tax revenue
Officials from the City of Osceola
organization.
Oversight only reflects the responses received from state agencies and political subdivisions;
however, other local political subdivisions were requested to respond to this proposed legislation
but did not. A listing of political subdivisions included in the Missouri Legislative Information
System (MOLIS) database is available upon request.
FISCAL IMPACT – State GovernmentFY 2026
(9 Mo.)
FY 2027FY 2028GENERAL REVENUE Revenue Gain - §144.054 - DOR 1%
collection fee for local sales tax$264,485$352,646$352,646
ESTIMATED NET EFFECT ON
GENERAL REVENUE$264,485$352,646$352,646 L.R. No. 2548H.01I
Bill No. HB 1162
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FISCAL IMPACT – Local GovernmentFY 2026
(9 Mo.)
FY 2027FY 2028LOCAL POLITCAL
SUBDIVISIONS
Revenue Gain - §144.054 – Local sales
tax on manufacturing $26,183,945 $34,911,927 $34,911,927
ESTIMATED NET EFFECT ON
LOCAL POLITCAL
SUBDIVISIONS$26,183,945 $34,911,927 $34,911,927
FISCAL IMPACT – Small Business
Certain small manufacturing businesses could be impacted by this proposal.
FISCAL DESCRIPTION
Currently, industries that use or consume:
(1) Electrical energy and gas (whether natural or artificial);
(2) Propane, water, coal, and energy sources;
(3) Chemicals; and
(4) Machinery, equipment, and materials;
in the manufacturing, processing, compounding, mining, or producing of any product, or use or
consume such things in the processing of recovered materials, or use such things in research and
development related to manufacturing, processing, compounding, mining, or producing any
product, are exempt from local sales taxes, as described in the bill.
This bill repeals such exemption from local sales tax.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space. L.R. No. 2548H.01I
Bill No. HB 1162
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February 25, 2025
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SOURCES OF INFORMATION
Department of Revenue
Office of Administration - Budget and Planning
City of Kansas City
Ste. Genevieve County Treasurer
Ste. Genevieve County Clerk
City of O’Fallon
City of Osceola
Julie MorffJessica HarrisDirectorAssistant DirectorFebruary 25, 2025February 25, 2025