HB 425 repeals and replaces Missouri’s corporate income tax statute to phase out the tax over time. Under the bill, the corporate income tax rate would remain at 4% for tax years beginning in 2020 through 2025, then decline in stages to 3% in 2026, 2% in 2027, and 1% in 2028, before being eliminated entirely for tax years beginning on or after January 1, 2029. The bill also preserves the existing pre-2020 rate history in the statute for earlier tax years.
The measure further provides that the phaseout does not apply to out-of-state businesses operating under sections 190.270 to 190.285, and it bars corporate income tax credits from being claimed or redeemed once no corporate income tax is imposed, while still allowing refundable credits that were properly claimed and issued before elimination to be redeemed later. In effect, the bill would substantially reduce and then remove Missouri’s tax on corporate taxable income, changing the state’s corporate tax code and future revenue structure.
Impact
HB 425 would significantly amend Missouri’s tax law by replacing section 143.071, RSMo, with a new corporate income tax schedule that phases the tax down to zero by 2029. The bill would directly affect corporations subject to Missouri income tax, the Department of Revenue’s administration of corporate tax collections, and the availability of corporate income tax credits after the tax is eliminated. It would also preserve an exception for certain out-of-state businesses operating under specified transportation-related provisions.
Sentiment
Based on the bill caption and the absence of recorded committee debate or votes in the provided materials, the overall sentiment appears to be supportive of tax reduction and business tax relief, with the bill framed as a straightforward phaseout of the corporate income tax. No opposing arguments, amendments, or recorded roll-call votes are included in the available context, so there is no documented committee controversy in the supplied record.
Contention
The main policy point likely to generate contention is the fiscal impact of eliminating a major state revenue source versus the economic argument for lowering taxes on business investment and competitiveness. Another possible issue is the bill’s treatment of corporate tax credits after the tax rate reaches zero, since it prohibits new claims or redemptions once the tax is eliminated while preserving some refundable credits issued earlier. The exception for out-of-state businesses operating under sections 190.270 to 190.285 may also be a point of interest for affected industries, though no specific objections or supporters are identified in the provided materials.