New state tax cuts benefit wealthier Missourians. How much you’ll save based on your income
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This week Missouri Gov. Mike Parson signed a new tax law passed by the General Assembly to cut income taxes to help Missourians struggling with rising costs and inflation.
But because of the way the cut is set up, those with the highest incomes in the state will save the most money.
The bill will lower the top state income tax rate from 5.3% to 4.95% starting next year. And then over time if the state experiences revenue growth, the rate would drop to 4.5%.
“We are thrilled that the General Assembly has answered our call to cut Missourians’ taxes and return some of their hard-earned dollars,” Gov. Parson said in a statement. “(The) action will provide real relief to taxpaying Missourians. Relief that is even more critical now as Missouri families face rising grocery bills, high gas prices, and record inflation.”
The Missouri Budget Project, a nonprofit that analyzes fiscal policy, estimates that a third of Missourians with low or fixed incomes will not save any money from the new law at all, and that the vast majority of Missourians will save less than $150 on their taxes in the first year.
“It’s not something that’s going to have a dramatic effect on people’s lives,” said Traci Gleason, director of communication and public engagement at the Missouri Budget Project. “It doesn’t help folks who are struggling with inflation right now. It helps millionaires. Most working Missourians are going to see nothing or a couple bucks.”
The new tax law only affects income taxes, not sales taxes, property taxes or other taxes.
The foregone taxes will come out of Missouri’s general revenue that funds state programs and services. In the first year, the tax cuts will cost Missouri $513 million in revenue, and then once it is fully implemented, it will cost the state $1.15 billion each year.
Below you can see an estimate of how you can expect the tax cuts to affect you, based on your income, according to an analysis from the Missouri Budget Project. There are a lot of variables like family makeup, filing status and more that affect how your tax bills add up, so these calculations are based on the average income for each income group shown below.
