Missouri Taxpayers to Benefit from Historic Tax Cuts in 2023; Department of Revenue Stresses Importance of Updating Withholdings
With a new tax season underway, the Missouri Department of Revenue (DOR) is encouraging Missouri income tax filers to review important individual income tax changes effective for the 2022 tax year. Before filing, filers may refer to the DOR’s “What’s New?” resource for details on changes to the Missouri standard deduction, the new deductions and credits available and more.
While filers are preparing to file their 2022 tax returns, it’s also important to plan ahead for next year. Under Governor Parson’s historic tax cut legislation that was signed into law in October 2022, nearly all Missouri filers will pay tax at a lower rate in 2023.
Senate Bills 3 & 5 made several changes to income tax laws in the state of Missouri, including:
- Reducing the top individual income tax rate from 5.2 to 4.95%;
- Eliminating the bottom income tax bracket, allowing Missourians to earn their first $1,000 tax free;
- Allowing an additional 0.15% top income tax rate reduction to 4.8% when net general revenues increase by $175 million;
- Eliminating income taxes for individuals making less than $13,000 a year and couples making less than $26,000; and
- Allowing three additional 0.1% top income tax rate reductions in future years when net general revenue increases by $200 million, adjusted for inflation.
The DOR strongly encourages employees earning wages in Missouri to review their federal and state withholdings annually and whenever a major life change has occurred to determine if their employer is withholding their preferred amount from their paycheck. Missouri wage earners may review their Employee’s Withholding Certificate (Form MO W-4) by completing a “Paycheck Checkup” using the DOR’s withholding calculator.
Employees interested in updating their MO W-4 can request the form from their employer or print one from the DOR website. Employees can then simply submit their updated form to their employer. Following up to confirm the updates are in effect is always a good idea, as is reviewing the form at least once a year thereafter.
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