Missouri tax cuts to take effect in 2017
Missouri tax cuts passed by the state legislature in 2014 will begin to take effect in the upcoming 2017 tax year.
As you might recall, Senate Bill 509 was vetoed by the governor, but the veto was overridden by the legislature. Changes created by the legislation include the following provisions.
- The top individual income tax rate will be reduced from 6% to 5.5%. This change is scheduled to take place over a minimum of a 5 year period beginning in 2017 at 0.1% per year. This annual reduction will only be activated if the net general revenue collected in the previous fiscal year exceeds the amount of net general revenue for any of the three previous fiscal years by at least $150 million.
- The individual income tax brackets will be annually adjusted for inflation starting in 2017.
- Eventually, individuals will be allowed to take a deduction on their tax returns for a maximum of 25% of business income. This includes business income reported on Schedule C, Form 1120-S, and Form 1065. No deduction is provided for businesses taxed as corporations. This deduction phases in at 5% per year targeted to start in 2017 and has the same general revenue restriction as the overall individual tax rate cut.
- The personal exemption on the Missouri return will increase from $2,100 to $2,600 for eligible Missouri individual taxpayers who also have income of less than $20,000.
Even if the revenue thresholds are met, these changes will phase in slowly, but over time they have the potential to create substantial tax savings for Missouri taxpayers. If you have any questions about how these tax cuts might affect you, please contact your WK advisor at (573) 442-6171 or (573) 635-6196.
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NEW LAW ACCELERATES FEDERAL W-2 FILING DUE DATE NEXT YEAR. Employers will be required to file Form W-2 by January 31 each year, beginning in 2017 for the 2016 tax year. Currently, the W-2 is due to the Social Security Administration by the end of February if filing paper forms and March 31 if filing electronically.
NEW LAW CHANGES SOME TAX RETURN DUE DATES. A number of tax return due dates were changed by provisions of a federal law extending highway funding. While that might seem like an odd bill for tax changes, it became law of the land on July 31, 2015, when President Obama signed the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015” (the Act).
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