The Missouri legislature has passed a bill that eliminates the state income tax on Social Security benefits and provides a property tax credit for senior citizens.
The House voted 154-2 Monday to pass legislation that allows Missouri residents who are eligible for Social Security benefits to take the maximum deduction, regardless of their filing status or adjusted gross income.
The Senate passed the bill in April, 33-1.
Because the House did not add onto the Senate bill before passing it, the legislation now goes to Gov. Mike Parson.
Speaking on the bill Monday, Rep. Ben Baker, R-Neosho, said it protects Missouri’s seniors.
“With the rising costs of consumer goods. It's more important now than ever to put money back in the pockets of Missouri seniors, particularly those on fixed incomes,” Baker said.
According to the U.S. Social Security Administration, the earliest age people can start to receive regular benefits is 62.
Under current Missouri law, there is an income cap where single tax filers who make more than $85,000 and joint filers who make more than $100,000 would owe some state income tax on Social Security. The bill removes that cap.
The new law regarding Social Security would start for the tax year beginning in January 2024.
According to a fiscal note on the bill, this change is estimated to cost the state $318 million annually.
While she voted for the legislation, Rep. Deb Lavender, D-Manchester, said the loss of state revenue concerned her.
“We don't have anything in place to replenish that revenue that we're cutting out of our income levels for us to be able to have the ability to spend in the future,” Lavender said.
In addition to the section of the bill on Social Security, the bill authorizes counties to grant a property tax credit for a senior citizen’s primary residence.
Baker said that credit would apply to seniors who are 65 and older and would effectively freeze their property taxes.
“Seniors who have played by the rules their entire lives, saved for retirement, paid their fair share of taxes, should never face the prospect of being taxed out of their home by the government,” Baker said.
Counties would be able to enact this credit either through an ordinance or a public referendum.
Speaker of the House Dean Plocher, R-Des Peres, spoke in favor of the bill on the House floor.
“Our seniors need that safety, to know that when they're paying into the system, they should be able to get it on the back end and enjoy a secure retirement,” Plocher said.
