HB1159 Revises property tax credit for senior citizens and disabled and establishes a Missouri earned income tax credit.
Sponsor: Boucher, Bill (48) Effective Date:12/31/2000
CoSponsor: LR Number: 2326S.03C
Last Action: COMMITTEE: SENATE WAYS AND MEANS
05/11/2000 - SCS reported do pass (S)
SCS HB 1159
Next Hearing:Hearing not scheduled
Calendar:Bill currently not on calendar
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BILL SUMMARIES BILL TEXT
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Available Bill Summaries for HB1159 Copyright(c)
* Perfected * Committee * Introduced

Available Bill Text for HB1159
* Perfected * Committee * Introduced *

BILL SUMMARIES

PERFECTED

HB 1159 -- TAXATION (Boucher)

This bill makes numerous changes related to taxation.  The
changes are as follows:

TAXATION OF PENSIONS

Under current law, both public and private pension income is
deductible from state income tax on a limited basis based on
taxpayer income and a maximum pension amount.  The bill removes
those limitations and allows all pension income to be deductible
regardless of taxpayer income or the amount of pension income
received.

TAXATION OF SOCIAL SECURITY

Under current law, a portion of Social Security benefits
received are taxed based on the amount of taxpayer income and
the amount of Social Security benefits received.  The bill
exempts all Social Security benefits received regardless of
taxpayer income or the amount of Social Security benefits
received.

EARNED INCOME TAX CREDIT

The bill allows a state individual income tax credit equal to 2
1/2% of any earned income tax credit claimed by the taxpayer on
the federal income tax return.  Any amount of credit which
exceeds the taxpayer's liability in any tax year will be
refunded to the taxpayer or carried forward into future tax
years.  The earned income tax credit will become effective
January 1, 2001.

DEDUCTION FOR HEALTH INSURANCE PREMIUMS AND OUT-OF-POCKET
MEDICAL COSTS

The bill allows an individual income tax deduction for insurance
premiums and out-of-pocket medical costs paid by a taxpayer up
to $2,000 per tax year.

The deductible amount is only to the extent that the costs are
included in a taxpayer's federal adjusted gross income.
Out-of-pocket medical costs are those deductions allowed for
health costs as a federal itemized deduction.

CIRCUIT BREAKER INCOME EXPANSION

The bill expands the income qualifications for eligibility for
the Senior Citizens/Disabled Persons Property Tax Credit,
commonly known as circuit breaker.  Taxpayers will be allowed to
deduct from eligible income 100% of any Social Security
benefits, railroad retirement benefits, and public school
retirement benefits received during the tax year.

PROPERTY TAX HOMESTEAD EXEMPTION

The bill authorizes a homestead exemption for purposes of real
property taxation for taxpayers who are 65 years old or older.
The homestead exemption amount will be any future increases in
assessed valuation on the homestead from the year the taxpayer
reaches the age of 65 or the effective date of the bill,
whichever is later.

The qualified taxpayer must file an application with the county
clerk by June 1 of the year preceding the year for the
exemption.  Once the exemption is granted, the taxpayer need
file no further application to qualify.  The state will be
required to reimburse the losses of any political subdivision as
the result of the homestead exemption through a voucher system
administered by the State Tax Commission and the Office of
Administration, subject to appropriation.  The homestead
exemption will become effective January 1, 2002.

AGRICULTURE INVESTMENT TAX CREDIT

The bill creates the Missouri Agricultural Investment Tax

Credit Program.  Taxpayers who qualify as farmers under federal
and state law will be allowed to take a 10% state income tax
credit for the cost of any item which is allowed as an expensing
item election under federal law.  The maximum credit will be
$5,000 per taxpayer per year.  The credit is not refundable, but
excess credits may be carried back 3 tax years or forward 5 tax
years.

FISCAL NOTE:  Partial Net Cost to General Revenue Fund of
$35,744,003 in FY 2001, $433,051,265 to $530,751,265 in FY 2002,
and $556,446,086 to $659,146,086 in FY 2003.  Estimated Net
Effect on Blind Pension Fund of $0 in FY 2001, FY 2002, and FY
2003.  The unknown revenue losses are not reflected in the
partial net effect to State Funds.


COMMITTEE

                            Corrected

HB 1159 -- INCOME TAX: PUBLIC PENSION DEDUCTION

SPONSOR:  Boucher

COMMITTEE ACTION:  Voted "do pass" by the Committee on Ways and
Means by a vote of 16 to 0.

This bill authorizes an individual income tax deduction equal to
100% of the amount of any annuity, pension, or retirement
allowance received by a retired federal, state, or local
government employee, regardless of the amount of the allowance
or the income of the retiree.  Under current law, federal,
state, and local government retirees may deduct up to $6,000 of
pension allowances received each year if their income is not in
excess of $32,000 for married or $25,000 for single taxpayers.

The bill will become effective January 1, 2001.

FISCAL NOTE:  Estimated Net Cost to General Revenue Fund of $0
in FY 2001, $130,175,000 in FY 2002, and $154,618,333 in FY 2003.

PROPONENTS:  Supporters say that the public pension deduction
should be increased because public employees dedicated their
working life to public service versus the private sector where
they often would receive a higher salary.  Also, state and local
employees were originally given a total pension deduction only
to have it taken away after they retired.

Testifying for the bill were Representative Boucher; Wayne Cook;
National Association of Retired Federal Employees; ARMS; Retired
Postal Carrier Association; AARP; Missouri Retired Teachers'
Association; County Commissioners' Association; Charles Jensen;
Bill Shaw; Missouri Association of Veteran's Organizations; and
Norm Combs.

OPPONENTS:  There was no opposition voiced to the committee.

Bill Tucker, Assistant Director of Research


INTRODUCED

HB 1159 -- Income Tax on Public Pensions

Sponsor:  Boucher

This bill authorizes an individual income tax deduction equal to
100% of the amount of any annuity, pension, or retirement
allowance received by a retired federal, state, or local
government employee, regardless of the amount of the allowance
or the income of the retiree.  Under current law, federal,
state, and local government retirees may deduct up to $6,000 of
pension allowances received each year if their income is not in
excess of $32,000 for married or $25,000 for single taxpayers.

This bill will become effective January 1, 2001.


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