Modifies provisions regarding income taxes, including the imposition of a 4% flat income tax
Summary
SB 5 would substantially restructure Missouri’s individual and corporate income tax system. The bill repeals and replaces three income tax statutes to phase in a flat 4% individual income tax rate beginning with tax years on or after January 1, 2026, while preserving a temporary 4.95% top rate for tax years beginning in 2023 through 2025. It also keeps a no-tax threshold for the first $1,000 of taxable income for those years and directs the Department of Revenue to adjust tax tables and publish the applicable rates and brackets.
The bill also changes Missouri’s treatment of federal income tax deductions. For individual taxpayers, the current deduction tied to federal income tax liability would continue through 2025, but would be eliminated beginning in 2026. For corporate taxpayers, the bill likewise ends the existing deduction for 2026 and later tax years. In addition, the bill preserves and updates inflation adjustments for brackets through 2025 and defines key terms such as CPI, net general revenue, and inflation for purposes of triggering future rate changes.
Impact
SB 5 would amend sections 143.011, 143.021, and 143.171, RSMo, replacing the current graduated income tax structure with a flat-rate system and eliminating the federal income tax deduction for both individual and corporate taxpayers starting in 2026. It would also require the Department of Revenue to revise tax tables and publish rates to implement the new structure. The bill affects Missouri residents, individual filers, and corporations by changing tax liability calculations, bracket indexing, and the availability of deductions tied to federal tax payments.
Sentiment
Based on the bill text and available context, the measure appears to be a tax-cut and tax-simplification proposal, with a clear policy direction toward lowering and flattening income tax rates over time. No committee transcripts or recorded votes were provided, so there is no documented debate history in the supplied materials. The caption suggests the bill was framed as a major income tax reform centered on a 4% flat tax.
Contention
The main points of contention likely concern the shift from a graduated income tax to a flat tax, the elimination of the federal income tax deduction, and the revenue triggers required for future rate reductions. Supporters would likely emphasize simplification, lower rates, and automatic tax relief tied to revenue growth, while opponents would likely focus on the potential loss of progressivity, reduced deductions, and uncertainty about state revenue impacts. Because no committee discussion or vote record is included, the specific positions of legislators or stakeholders are not documented in the provided materials.