Exempts certain professions from income tax
SB 650, titled the “Retaining MO Workers Act,” creates a new Missouri income tax subtraction for wages earned by certain “qualifying employees.” Beginning with tax years on or after January 1, 2026, a taxpayer may subtract up to the first $100,000 of income earned as a qualifying employee from federal adjusted gross income, to the extent that income is included in federal AGI. Income earned outside of a qualifying role does not receive the subtraction.
The bill defines qualifying employees broadly to include first responders, nurses, teachers, veterans, certain state and federal government employees, laborers in specified NAICS sectors, commercial motor vehicle drivers, nursing home employees, and child care providers. It also defines several of those categories in detail, including first responders, teachers, nurses, laborers, and child care providers, and ties the tax benefit to employment in those occupations rather than to residency, age, or general income level.
The bill would amend Chapter 143, RSMo, by adding a new section 143.126 to Missouri’s income tax code. Its practical effect is to reduce taxable income for eligible workers by allowing a subtraction from federal adjusted gross income, thereby lowering state income tax liability for covered occupations. The measure would affect taxpayers employed in the listed professions and industries, while leaving other income fully taxable under existing law. It also creates new statutory definitions that Missouri tax administrators and taxpayers would need to apply when determining eligibility.
Based on the bill text and available context, the measure appears generally supportive of workers in essential and hard-to-fill occupations, with a clear policy goal of retaining Missouri workers and rewarding public safety, education, healthcare, childcare, and labor-sector employment. The caption and title frame the bill positively as an exemption for certain professions, and there is no recorded committee or floor debate in the provided materials indicating organized opposition or amendment activity. Overall, the available record suggests a favorable or at least noncontroversial presentation of the bill.
The main policy issue likely to generate debate is the breadth and cost of the tax subtraction, since it extends to a wide range of occupations and allows up to $100,000 of qualifying income to be subtracted each year. Potential points of contention include whether the listed professions are the right ones to target, whether the benefit should be limited by income level or occupation, and the fiscal impact on state revenue. Another possible issue is administrative complexity, because eligibility depends on detailed job classifications, licensing status, and NAICS sector definitions, which could create disputes over who qualifies.