SB 1406 establishes the “Missouri Defense and Energy Independence Act,” creating a new state incentive program aimed at encouraging Missouri businesses to convert operations to produce chemicals, gases, metals, and rare earth minerals used in energy projects and Department of Defense-related projects. The bill is targeted at nontraditional defense contractors registered to do business in Missouri that incur qualifying conversion costs to shift production away from foreign-produced inputs.
The bill authorizes a state tax credit beginning with tax years on or after January 1, 2027. A qualified company may claim a credit equal to its qualified amount, but the total available to any one company is capped at 15% of the statewide annual credit cap, and the statewide cap is $40 million per tax year. The credits are nonrefundable, cannot be carried forward, and may be assigned, transferred, sold, or otherwise conveyed. The Department of Economic Development is responsible for administering the program and adopting rules to verify eligibility and costs.
In addition to tax credits, the bill creates the “Grants for Independence from Foreign Influence Fund,” which must be seeded with at least $10 million appropriated by the General Assembly and may also receive gifts or federal/private contributions. From that fund, the department may award grants of up to $500,000 per application to cover qualified conversion costs incurred before a conversion is completed. The fund is dedicated, does not revert at the end of the biennium, and is to be used solely for the grant program.
The bill also includes a six-year sunset provision under Missouri’s sunset law, meaning the program would automatically expire unless reauthorized. It further directs the department to promulgate rules, while tying those rules to legislative review under chapter 536. Overall, the bill would add a new economic development incentive structure in chapter 620, with both tax expenditures and direct grant spending intended to support domestic supply-chain resilience and reduce reliance on foreign sources.
The general sentiment reflected by the bill’s structure is strongly supportive of industrial reshoring, defense readiness, and energy independence, with the program framed as a strategic economic and security measure. Because there are no committee transcripts or recorded votes provided, there is no documented opposition or debate in the supplied materials. The main potential points of contention suggested by the text are the cost to the state through a $40 million annual tax credit cap and a $10 million minimum fund appropriation, the use of public incentives for private firms, and the administrative complexity of determining which conversion costs qualify.
SB 1406 would add section 620.1641 to Missouri law and create a new tax credit and grant program administered by the Department of Economic Development. It would affect state tax law by allowing credits against taxes imposed under chapters 143 and 148, excluding withholding tax, and would establish a dedicated fund in the state treasury for grants. The bill would also require rulemaking, impose annual and per-company limits, and create a sunset after six years unless renewed.
The bill’s framing suggests favorable sentiment toward domestic manufacturing, defense supply-chain security, and reducing dependence on foreign-produced materials. No committee discussion or vote history was provided, so there is no recorded legislative debate to indicate support or opposition. Based on the text alone, the measure appears designed as a pro-business, pro-security incentive program rather than a controversial regulatory change.
The likely areas of contention are fiscal and policy-based: the bill authorizes up to $40 million in annual tax credits and requires at least $10 million in appropriated funding for grants, which may raise concerns about state revenue and budget priorities. Another possible issue is whether the incentives are sufficiently targeted, since they benefit qualifying nontraditional defense contractors and allow credits to be transferred or sold. The administrative burden of verifying qualified conversion costs and determining eligibility could also be debated, especially given the broad industrial categories covered.