Some Missourians on pensions and people with disabilities receiving Social Security benefits would receive an income tax cut under legislation heading to the desk of Gov. Mike Parson.
On Monday, the Missouri House voted 154-2 to approve a Senate-passed bill that also includes provisions for local property tax relief for retirees in addition to the income tax cut.
Under the bill, the first $6,000 of income from a public pension and all Social Security benefits are exempt from income taxes. The biggest change in tax law under the bill is the removal of an income cap -- $85,000 for single filers, $100,000 for married couples -- for the pension and Social Security exemptions.
The bill, which is projected to reduce state revenue by up to $318 million annually if signed by Parson, was unchanged from the version passed in the Senate in April.
The bill now seems to be the largest tax measure lawmakers will pass this year. In March, the House approved a bill cutting corporate and income taxes by more than $1 billion. Other bills addressing personal property taxes that have passed the House but languished in the Senate would cut up to $800 million from local tax receipts.
The only opposition in the House came from members who thought the tax cut was too large and comes too soon after lawmakers passed a bill reducing revenues by almost $800 million annually.
The exemption for Social Security benefits, for example, is for any portion of payments that are taxable under federal law. There is no federal income tax on Social Security benefits for people with incomes of about $25,000 or below. Up to 85 percent of Social Security benefits are taxable.
State Rep. Deb Lavender, D-Manchester, said completely eliminating the cap benefits people who have large incomes in addition to people who need the tax break.
"We had a chance to put a cap on this, and we had a chance to help the people in our state who would most benefit from this," Lavender said.
House Speaker Dean Plocher, who has pushed for much larger income and corporate tax cuts that now appear unlikely to pass, urged the House to accept the bill.
"Our seniors need that," Plocher said. "When they are paying into the system, they should get it on the back end."
The local break included in the bill would allow counties to pass ordinances exempting people over 65 from increases in property taxes. If passed by local voters, no senior citizen would pay more in property taxes on real property than they did for the same property in the year they turned 65.
The Missouri Independent, www.missouriindependent.com, is a nonprofit, nonpartisan news organization covering state government and its impact on Missourians.