Tax bills come before Missouri House committee as advocates lobby for cuts
COLUMBIA Mo. (KMIZ)
Rep. Bishop Davidson (R-Greene County) presented House Bill 100 to a special committee on tax reform Tuesday in hopes of implementing a flat 4% income tax rate in the state and getting one step closer in fully eliminating income tax.
If HB 100 gets implemented, starting in 2027, the 4% flat tax would be reduced when the revenue grows by at least $1 million and the Tax Reform Fund is at least $120 million at the end of the fiscal year. The plan is for deductions to only happen when there is a surplus in revenue.
During the hearing for the bill, Davidson laid out his plan to expand sales tax to services and cut exemptions in sales tax rates to supplement money lost from cutting income tax.
"None of it utilizes cuts, it doesn't use replacement, it utilizes growth," Davidson said during the hearing.
The group Americans for Prosperity held a rally Tuesday morning in the third-floor Capitol rotunda to support the bill and pass flyers to local legislatures before the hearing, urging them to eliminate state income tax.
The Bill joins the dozens of bills filed by other senators and state representatives that plan to set a flat tax in January 2026 with the tax slowly decreasing over the following years to phase out income tax in the state entirely.
"This year has been the most momentum behind it that we've seen in a really long time," AFP Legislative Liaison Camellia Peterson said. "We have a governor who is fully on board with it, we have a coalition of legislators that have really done great work in crafting legislation thoughtfully that can make this happen."
Missouri has a tax rate of 0.5% for every $1,273 of annual taxable income. This rate caps out at a top rate of 4.8% for annual incomes of $8,911 or greater.
During the hearing, Davidson compared Missouri to the state of Tennessee -- an income-tax-free state -- making connections between the states' agricultural strength, tourism rates and large cities, arguing that Missouri can succeed as an income-tax-free state.
"There's nine other states without income taxes right now, we're trying to be the 10th," Davidson said. "If you look at how those states perform relative to the states that have income taxes, they are just doing quite well."
Supporters of the bill argue that lowering income tax will also sway people considering moving to Missouri.
"Young people that are looking maybe just out of college to settle somewhere, look for a job, they're going to look for a state with 0% income tax," advocate for eliminating income tax A.J. Mall said.
Supporters also add that while sales taxes may go up or be added to services, Missouri residents can decide what to purchase on their own and what they can and can't afford.
Opponents of the bill argue that lower-income residents may not have the ability to choose and that a higher sales tax may turn tourists away from the state.
"It's going to it's going to injure lower-income people because they spend most of their money on things," Missouri Realtor's Chief Lobbyist Sam Licklider said.
The next step for the bill is for the committee to vote on it, Davidson hopes for this to happen Feb. 11.
