The Missouri House of Representatives passed two bills containing a bevy of tax measures Wednesday, including changes to income tax rates and tax credits.
House Bill 798 passed with a vote of 100-53, while House Bill 660 was approved 89-58.
Both bills will now proceed to the Senate, where a measure that would remove the capital gains tax was stalled earlier this week by a filibuster.
Income tax
Missouri currently has a graduated income tax ranging from 2% to 4.8%. Among other provisions, HB 798 would set the state income tax to a flat rate of 4.7%, with the ability to eventually reduce it an additional point to 3.7% over the next 10 years.
“This is a very good bill,” said bill handler Chad Perkins, R-Bowling Green, while introducing the legislation last week. “People say this all the time, but it really is quite simple.”
The ability to reduce the rate to 3.7% was added to the bill by an amendment, and was not brought up during the floor debate. If passed, that language would allow the top rate of the state income tax to drop much faster than the planned reductions in current law.
The estimated cost of the bill to the state’s revenue is almost $1.3 billion, most of which is the result of the proposed income tax changes.
Rep. Kemp Strickler, D-Lee’s Summit, said the legislation was pushed through the House too fast and without sufficient discussion.
“Is that good legislation?” Strickler said before the bill was voted on. “The body was not told that that would have about a $1 billion impact for revenue. Is that good government?”
The bill would also reduce the corporate income tax from 4% to 3.75%, and it contains language about removing the capital gains tax that the House already passed in a standalone form.
Tax credits
HB 798 would remove the Missouri Working Family Tax Credit, which benefits low- to middle-income households, and replace it with an additional $4,000 standard deduction.
The bill would also increase the tax credit for donating to crisis pregnancy centers. Supporters of these centers say they increase options for pregnant women, while critics say they mostly advocate against abortion.
Currently, donors to these centers can claim a 70% tax credit. The bill would increase that to 100%.
The bill would also renew the tax credit for donating to diaper banks until 2031, with a similar increase from 50% to 100% reimbursement. The diaper bank tax credit expired last year.
“Specifically, in the nature of where we are as a state, I believe it’s important for us to be able to support mothers and infants,” said Rep. Christopher Warwick, R-Bolivar, who added the language to the bill.
Rep. Steve Butz, D-St. Louis, said during debate on the bill that crisis pregnancy centers were being privileged above other programs that benefit from tax credits, such as food banks.
“There is no sunset. There is no cap,” Butz said. “These are huge concessions that basically no other tax credits get.”
House Bill 660
The other tax bill passed, HB 660, contains a variety of more minor tax-related measures, such as limiting how often cities can offer new taxes for approval by residents and imposing penalties if counties are found to be out of compliance with state law regarding tax assessments.
“Everything in this bill is related to fairness and transparency in local taxation,” said bill sponsor Ben Keathley, R-Chesterfield, during debate last week. “A lot of things on this are as simple as making sure that we have true voter input in line with what our constitution says. There are a lot of different things we have to do, hence a big bill.”
Rep. Del Taylor, D-St. Louis, expressed concern during the debate that the House was being hasty in adding provisions that hadn’t yet been approved by committees, which is the standard first step before a bill is brought up for debate on the House floor.
“Some of these things have not been fully vetted yet,” Taylor said. “To bring and roll these things into the amendment that have not been fully vetted, that are still on the table in the Ways and Means Committee, is a little unfair to this body.”
The River City Journalism Fund supports St. Louis Public Radio's Statehouse internship. Evy Lewis is the 2025 reporting intern. See rcjf.org for more information about the fund, which seeks to advance journalism in St. Louis.
