Bill > SB5

This bill modifies Missouri's income tax structure by gradually implementing a flat 4% income tax rate, replacing the current progressive tax system with multiple tax brackets. For tax years from 2023 to 2025, the bill reduces the top tax rate to 4.95%, with income tax brackets adjusted annually for inflation. Starting January 1, 2026, the state will impose a flat 4% income tax rate for all residents. The bill also establishes a mechanism for potential future tax rate reductions, which can occur if net general revenue meets specific growth thresholds. Specifically, beginning in 2027, the tax rate could be reduced by one-tenth of a percent per year if net general revenue increases by at least $120 million compared to previous fiscal years and exceeds revenue from five years prior when adjusted for inflation. Additionally, the bill modifies the federal income tax deduction, providing a sliding scale deduction percentage based on gross income through 2025, and eliminating the federal income tax deduction entirely for tax years starting in 2026. These changes aim to simplify the state's tax code and potentially provide tax relief for Missouri residents.

https://www.senate.mo.gov/25info/BTS_Web/Bill.aspx?SessionType=E1&BillID=18267453