Missouri Gov. Mike Parson recently signed into law legislation that reduces the state’s individual income tax rate.

The law, signed on Oct. 5, 2022, and effective for the 2023 calendar year, reduces the top individual income tax rate from 5.2 percent to 4.95 percent. It also eliminates the bottom income tax bracket, allowing Missourians to earn their first $1,000 tax-free. In addition, the law allows for an additional 0.15 percent top income tax rate reduction to 4.8 percent when Missouri’s net general revenues increase by $175 million and another 0.1 percent top income tax rate reduction in future years when net general revenue of the state increases by $200 million. If Missouri’s revenue increases as stated above and the corresponding rate reductions take effect, the new legislation will reduce the top income tax rate in Missouri to 4.5 percent.  

Finally, the new law eliminates the imposition of income tax on individuals making less than $13,000 a year and couples making less than $26,000 per year. It does not contain any state-level tax rate changes for corporations.

Previously, Missouri’s top individual income tax rate was scheduled to fall from 5.3 percent to 5.2 percent in January, with the potential to gradually drop to 4.8 percent if revenue thresholds were exceeded in future years. The changes in Missouri’s income tax rates do not affect federal taxes. A summary of the current federal rates for 2022 is below:

Tax Rate

For Single Filers

For Married Individuals Filing Joint Returns

For Heads of Households

10%

$0 to $10,275

$0 to $20,550

$0 to $14,650

12%

$10,275 to $41,775

$20,550 to $83,550

$14,650 to $55,900

22%

$41,775 to $89,075

$83,550 to $178,150

$55,900 to $89,050

24%

$89,075 to $170,050

$178,150 to $340,100

$89,050 to $170,050

32%

$170,050 to $215,950

$340,100 to $431,900

$170,050 to $215,950

35%

$215,950 to $539,900

$431,900 to $647,850

$215,950 to $539,900

37%

$539,900 or more

$647,850 or more

$539,900 or more

The new legislation also included the creation and extension of certain agricultural tax credits.  These tax credits are meant to help develop the state’s agricultural community.

A press release about the law’s signing is available at https://governor.mo.gov/press-releases/archive/governor-parson-signs-largest-income-tax-cut-state-history-law.