HB 1861 Summary

• Enacts the "Broad-Based Tax Relief Act of 2012" allowing individual taxpayers to subtract a percentage of business income from Missouri adjusted gross income, with percentages increasing from 10% (2012) to 20% (2013) to 30% (2014).

• For tax years beginning January 1, 2015 and later, the business income deduction percentage increases to 40% then 50% once combined individual and corporate income tax revenues equal or exceed fiscal year 2010 levels.

• Reduces corporate income tax rates in phases: 5.625% for 2012, 5% for 2013, 4.375% for 2014, and further reductions to 3.75% then 3.125% once revenue benchmarks are met starting in 2015.

• Allows shareholders of small corporations and partners in partnerships to claim proportional business income deductions based on their ownership stake as of the last day of the tax period.

• Corporate tax rate reductions and increased business income deductions are permanent once achieved and will not increase even if future tax revenues fall below 2010 levels.