Bill also closes loophole and makes the Show-Me State more competitive
JEFFERSON CITY – The Missouri State Senate approved a measure today that will simplify the state corporate income tax code and make Missouri more attractive to incoming businesses. Senate Leader Ron Richard, R-Joplin, said one of the Senate’s goals is to create the best business environment possible in order to drive economic growth. A lower corporate income tax rate is one of those steps.
“Since I have entered office, economic development has been my top priority,” said Richard. “This tax bill gives relief to small businesses and will make Missouri more competitive and attractive in the eyes of companies looking to relocate.”
Senate Bill 674 lowers the corporate tax rate from 6.25 percent to 3.5 percent beginning Jan. 1, 2019. The measure also closes a loophole that allowed an affiliated group of corporations to have 50 percent or more of its income derived from sources within Missouri to file a consolidated return.
Bill sponsor Sen. Andrew Koenig, R-Manchester, said the bill not only provides relief to Missouri businesses and corporations, it simplifies the tax code.
“Missouri’s corporate income tax code is complex and outdated,” said Koenig. “By simplifying the code and broadening the overall tax base, we can lower rates but still keep an appropriate balance in our budget. This is a reasonable and sustainable approach to tax reform.”
Senate Bill 674 also requires all corporations to use a single-sales factor income allocation method, which means Missouri’s corporate taxable income will be based exclusively on the percentage of sales made in Missouri, not on the location of property or employees.
Majority Floor Leader Mike Kehoe, R-Jefferson City, said by approving Senate Bill 674, Missouri joins other states that are moving toward a single-sales factor method.
“The single-sales factor method can be a more attractive option for computing Missouri taxable income,” said Kehoe. “This is another tool we can use to build a stronger, more prosperous economy.”
The bill now heads to the House for consideration. For more on this bill and others, visit www.senate.mo.gov.