17 July 2018 Missouri top income tax and supplemental withholding rate to decrease as of January 1, 2019 Recently enacted HB 2540 will decrease the maximum Missouri state personal income tax rate to 5.4% effective January 1, 2019, down from 5.9% for calendar year 2018. Accordingly, the supplemental rate of income tax withholding will also decrease to 5.4% for calendar year 2019. (Governor's press release.) As announced by Missouri State Treasurer Eric Schmitt, the maximum rate was scheduled to decrease to 5.8% for calendar year 2019. HB 2540 reduces the scheduled maximum income tax rate by 0.4% for calendar year 2019, reducing the highest rate to 5.4%. Under HB 2540, the highest rate will be further reduced in 0.1% increments each year, if net general revenue collections meet certain triggers, until the highest rate reaches 5.1%. — Personal and dependency exemptions. As we previously reported, personal and dependency exemptions have been eliminated. Prior to calendar year 2018, an individual could deduct $2,100 as a personal exemption, $2,100 for a spouse, and $1,200 for each dependent. HB 2540 codifies the provision that Missouri personal and dependency exemptions are not allowed if the federal exemption amount is zero. — Federal tax deduction. Currently, individuals can deduct their federal income tax liability up to $5,000 or if a combined return, up to $10,000. Beginning January 1, 2019, HB 2540 phases out this deduction for individuals based on Missouri adjusted gross income limits. The deduction is allowed at 35% for incomes of $25,000 or less; 25% for incomes of $25,001 to $50,000; 15% for incomes of $50,001 to $100,000; and 5% for incomes of $100,001 to $125,000. The deduction is eliminated for incomes over $125,000. Under legislation enacted in 2014 (SB 509), the highest income tax rate was scheduled to incrementally decrease by 0.1% each year for five years, as long as certain revenue thresholds were met, until the highest rate reached 5.5%.
Document ID: 2018-1426 | |||||||||
