Missouri reduces tax rates for individuals

Missouri’s top individual income tax rate will decrease from 5.9% to 5.4% beginning in 2019. Gov. Mike Parson signed legislation containing the tax cut.

Further reductions. The top rate can drop further to 5.1% if the state meets revenue targets. The rate will decrease by 0.1% for each year that the state meets the targets.

Deduction for federal income taxes. To offset the tax cut, Missouri limits the deduction for federal income tax paid. Single filers may still deduct up to $5,000, and combined filers may still deduct up to $10,000. But, beginning in 2019, Missouri phases out the deduction at specified Missouri adjusted gross income levels. The Missouri adjusted gross income levels and the deductible percentages of federal income tax are:

  • $25,000 or less — 35%
  • $25,001 to $50,000 — 25%
  • $50,001 to $100,000 — 15%
  • $100,001 to $125,000 — 5%
  • $125,001 or more — 0%

Business income deduction. Missouri also reduces the maximum business income deduction for individuals from 25% to 20%.

Personal exemptions. Finally, Missouri will not allow personal and dependent exemptions when a taxpayer’s federal exemption amount is zero. (H.B. 2540, Laws 2018, approved July 12, 2018, and effective January 1, 2019.)

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