Subject to revenue triggers, the current schedule would reduce the state’s top rate to 4.8 percent in 2028 at the earliest. Missouri already saw individual income tax movement in the 2021 legislative session, with approval of the acceleration of tax triggers that were passed in 2014. The governor’s plan would also increase the standard deduction by $2,000 ($4,000 for married filing jointly) and eliminate the bottom income tax bracket. A reduction to 4.8 percent would give the state a lower rate than Illinois and Kentucky and come in just above Oklahoma’s rate of 4.75 percent. Missouri boasts a lower income tax than Iowa, Nebraska, Kansas, and Arkansas, but falls behind Illinois, Kentucky, Oklahoma, and income tax-free Tennessee. Missouri’s top rate of 5.3 percent compares relatively well to the state’s neighbors. An income tax reduction is a competitive move, especially in a rapidly changing tax landscape, but the legislature should aim for another competitive change at the same time: consolidating the state’s nine income tax brackets into one flat rate. Mike Parson (R) has called the Missouri legislature into a special session beginning September 6 th, with the goal of reducing the individual income tax from 5.4 percent to 4.8 percent and raising the standard deduction.
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