State Bill of the Month – January 2025: Missouri HB 425

HB 425:

Introduced by Missouri State Rep. Jeff Vernetti (R-123), this bill would phase out the corporate income tax over a four year period. Currently, the corporate income tax in Missouri is four percent. Beginning on January 1, 2026, the Missouri corporate income tax will be reduced by one percent each year until no corporate income tax is administered, starting on January 1, 2029. Eliminating the corporate income tax will reduce prices for consumers and taxpayers throughout Missouri and will make the Show-Me State more attractive to businesses.

The bill, which was pre-filed in December (2024) and referred to the House Special Committee on Tax Reform, would be a boost to businesses throughout the state. It would have the dual effect of making the state more competitive economically. Taxes on businesses are ultimately taxes on consumers. When businesses have higher operating costs, they pass those costs down to their customers, leading to higher prices for goods and services. Phasing out the corporate income tax will allow businesses to invest those savings back into their products, which will improve both the quality and price-point.

The House Special Committee on Tax Reform held an executive session on Tuesday, January 28. The bill was voted “do pass” 7-3. The bill is now headed to the House floor for further consideration.

Background:

Corporate income taxes have long been a burden on businesses at the federal and state level of government. Currently, the only states without a corporate income tax are Wyoming and South Dakota. Comparatively, Missouri’s corporate income tax rate is four percent, which is on the lower end of corporate tax rates across the 50 states.

As the bill’s sponsor adds:

“Missouri does have a low corporate income tax rate, but movements like this will certainly attract more business and will drive the business economy here in the state.”

According to the fiscal analysis of the bill, it could reduce state general revenue by almost $900 million annually if the bill were fully implemented. That nine-figure reduction would be about 2 percent of the FY2024 budget.[1]

It is for these reasons, among others, that TPA is pleased to make HB 425, as introduced by State Rep. Jeff Vernetti (R-123), its Bill of the Month for January 2025.

[1] https://www.dexterstatesman.com/news/missouri-lawmakers-propose-eliminating-corporate-income-tax-by-2029-what-it-means-for-businesses-and-consumers-f9fb0761