Modifies provisions relating to the taxability of certain deferred compensation plans
Impact
The modification of taxability provisions on deferred compensation plans is expected to have a significant impact on state laws concerning income tax collection. By exempting these contributions and payments from taxation, the bill aims to promote retirement savings and provide individuals with more flexibility regarding their compensation management. This change could incentivize individuals to participate in deferred compensation plans, thereby aiding their financial planning for retirement.
Summary
Senate Bill 649 aims to modify the provisions relating to the taxability of certain deferred compensation plans in Missouri. The bill proposes to repeal the existing section 92.113 of the Revised Statutes of Missouri and replace it with new language that specifies how contributions to deferred compensation plans should be treated for state income tax purposes. Specifically, it states that contributions to these plans, including salary reduction plans and cafeteria plans, will not be subject to Missouri state income tax at the time the contribution is made, nor will payments from these plans be taxed when made.
Contention
One notable point of contention regarding SB649 may arise from differing perspectives on tax policy and the state’s revenue. Supporters of the bill argue that exempting deferred compensation from state income tax is a positive move that promotes savings and financial security for individuals, particularly as they approach retirement. Conversely, critics might express concern that such tax exemptions could reduce state income tax revenue, potentially leading to budget shortfalls or affecting funding for public services.
Legislative history
As of now, the specific voting history for SB649 has not been documented, but the discussions surrounding similar measures often reflect broader debates on tax exemptions and the balance between providing incentives for saving and ensuring sufficient state revenue.