Parson said the cuts amount to a 5% reduction in people’s taxes. Each reduction would occur only if state revenue grows by an inflation-adjusted $200 million over the high mark of the previous three years while also exceeding an inflation-adjusted baseline. Missouri’s new law also authorizes three additional annual tax cuts that could eventually reduce the tax rate to 4.5%. The tax rate could drop to 4.8% as soon as 2024, if state tax revenue grows by at least $175 million over the high mark of the previous three years.
The new law will cut the tax rate to 4.95% in January and exempt the first $1,000 of income from taxation. Under previous law, Missouri’s top individual income tax rate already was scheduled to fall from 5.3% to 5.2% in January, with the potential to gradually drop to 4.8% if revenue-growth triggers were met in future years. Mike Parson said the estimated $760 million reduction, when fully phased in, will be “the largest tax cut in the state’s history.” While signing the income-tax-cut legislation Wednesday, Missouri Gov.
He plans to backfill that by using some of the state’s $6.6 billion surplus. Kemp estimates the state already has forgone about $800 million in gas tax revenue, which benefits roads. Brian Kemp signed an order Monday extending the state’s gas tax suspension another month, until after the Nov. Others have cut sales taxes on food or suspended gas taxes to help offset the effects of inflation. In addition to general income tax cuts and rebates, some states have approved targeted tax breaks for families or retirees.
At least 15 states have approved one-time rebates from their surpluses, including 10 led by Democratic governors and legislatures, four by Republicans and one - Virginia - with split partisan control. All have Republican-controlled legislatures except New York, where Democrats who hold power accelerated a previously approved tax rate reduction. Income tax rate cuts have passed in 14 states. At least 33 states have approved some form of tax relief this year.
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