Modifies provisions relating to the Missouri working family tax credit act and makes the tax credit refundable
Impact
The bill's implementation would modify state income tax laws by ensuring that eligible residents receive a tax credit equating to a percentage of the federal earned income tax credit. This change could have a far-reaching impact on low-income taxpayers, providing them with immediate financial relief and incentivizing employment for families who meet the credit requirements. The adjustment of tax structures could potentially lead to increased disposable income for low-to-moderate-income households in Missouri, fostering greater economic participation.
Summary
House Bill 1571 seeks to modify the existing Missouri Working Family Tax Credit Act by introducing provisions that make tax credits refundable for eligible taxpayers. Starting from the 2023 calendar year, eligible taxpayers will play a significant role in influencing the credit amounts based on their federal earned income tax credit amounts as of January 1, 2021. This legislative change aims to increase the financial viability for low-income families by making tax credits more easily accessible and beneficial at tax time.
Contention
One notable point of contention surrounding HB 1571 is how the funding of these refundable tax credits will be handled within the state's budget. The bill stipulates that the increase in the refundable percentage of the tax credit is contingent upon the state collecting sufficient net general revenue. This provision raises questions about the potential long-term sustainability of the tax credits, especially if state revenues fluctuate. Critics may express concern regarding how these measures could impact overall state revenue and the prioritization of funding for essential services.