Modifies provisions relating to the Missouri working family tax credit act and makes the tax credit refundable
Summary
HB1553 repeals and replaces Missouri’s existing section 143.177 to create the “Missouri Working Family Tax Credit Act.” The bill establishes a state income tax credit for eligible taxpayers who qualify for the federal Earned Income Tax Credit (EITC), allowing them to claim a percentage of the federal credit against Missouri income tax liability. The credit begins for tax year 2023 at 10% of the federal EITC amount and may increase up to 20% if state revenue growth meets a specified threshold.
The bill also changes how the credit works over time. For tax years beginning on or before December 31, 2025, the credit is nonrefundable and cannot be carried forward; for tax years beginning on or after January 1, 2026, the credit becomes refundable. In addition, the Department of Revenue must identify taxpayers who may qualify but did not claim the credit, notify them of potential eligibility, and issue an annual report on credit usage and fiscal impact. The department is also authorized to adopt rules to administer the program.
Impact
HB1553 would amend Missouri income tax law by replacing the current working family tax credit statute with a new framework tied to the federal EITC. It affects resident individual taxpayers with qualifying filing statuses who are subject to Missouri income tax and who are eligible for the federal earned income tax credit. The bill would also impose new administrative duties on the Department of Revenue, including eligibility review, taxpayer notification, annual reporting, and rulemaking. By making the credit refundable beginning in 2026, the bill would expand the fiscal benefit to taxpayers whose credit exceeds their tax liability and could increase state revenue losses relative to a nonrefundable credit.
Sentiment
The bill’s caption and structure suggest a generally supportive policy approach toward low- and moderate-income working families, with an emphasis on tax relief and automatic access to benefits. Because no committee transcript or recorded votes are provided, there is no direct evidence of floor debate or formal opposition in the supplied materials. The bill’s design, including a phased-in refundable credit and a revenue trigger for expansion, indicates an attempt to balance tax relief with fiscal caution.
Contention
The main points of potential contention are fiscal cost, refundability, and the revenue-based trigger for increasing the credit percentage. Supporters are likely to favor the credit as a targeted benefit for working families and EITC recipients, while critics may question whether the state can afford the revenue loss, especially once the credit becomes refundable in 2026. Another possible issue is the Department of Revenue’s obligation to identify and notify potentially eligible taxpayers, which may raise administrative and privacy concerns. The requirement that credit increases occur only when net general revenue exceeds prior-year benchmarks by $150 million also suggests debate over how quickly the benefit should expand.