Bill review: Eliminates the individual income tax (MO)

[DTrim99]

Bill Review: Eliminates the individual income tax

Reform ID: mo-sb1240 | State: MO
Bill text: https://www.senate.mo.gov/26info/pdf-bill/intro/SB1240.pdf
Description: Eliminates Missouri individual income tax for all tax years beginning on or after January 1, 2027, reducing rates from 2.0%-4.7% to 0%.

Merging this PR will publish the bill to the dashboard.

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What we model

Provision	Parameter	Current	Proposed
Missouri Income Tax Elimination	gov.states.mo.tax.income.rates.brackets[0-8].rate	Progressive rates from 2.0% to 4.7%	0% (complete elimination)

Validation

External estimates

Source	Estimate	Period	Link
Missouri Budget Project	~$8.7 billion	Annual	Analysis
MOST Policy Initiative	$8.75 billion	FY2025	Memo

Back-of-envelope check

Income tax is 60-65% of ~$13.5B general revenue = $8-9 billion

PE vs External comparison

Source	Estimate	vs PE	Difference
PE (PolicyEngine)	-$6.52B	—	—
Missouri Budget Project	-$8.7B	+33%	Review needed
MOST Policy Initiative	-$8.75B	+34%	Review needed
Back-of-envelope	-$8-9B	+30%	Review needed

Verdict: PE estimate is ~25-34% lower than external estimates. This is expected because:

1. CPS microdata may undercount high earners compared to state tax return data
2. External estimates may use different base year projections
3. PE uses static microsimulation; state estimates may include behavioral responses

Parameter changes

Parameter	Period	Value	Bill Reference
gov.states.mo.tax.income.rates.brackets[0].rate	2027-01-01 to 2100-12-31	0 (0%)	Section 143.011 RSMo
gov.states.mo.tax.income.rates.brackets[1].rate	2027-01-01 to 2100-12-31	0 (0%)	Section 143.011 RSMo
gov.states.mo.tax.income.rates.brackets[2].rate	2027-01-01 to 2100-12-31	0 (0%)	Section 143.011 RSMo
gov.states.mo.tax.income.rates.brackets[3].rate	2027-01-01 to 2100-12-31	0 (0%)	Section 143.011 RSMo
gov.states.mo.tax.income.rates.brackets[4].rate	2027-01-01 to 2100-12-31	0 (0%)	Section 143.011 RSMo
gov.states.mo.tax.income.rates.brackets[5].rate	2027-01-01 to 2100-12-31	0 (0%)	Section 143.011 RSMo
gov.states.mo.tax.income.rates.brackets[6].rate	2027-01-01 to 2100-12-31	0 (0%)	Section 143.011 RSMo
gov.states.mo.tax.income.rates.brackets[7].rate	2027-01-01 to 2100-12-31	0 (0%)	Section 143.011 RSMo
gov.states.mo.tax.income.rates.brackets[8].rate	2027-01-01 to 2100-12-31	0 (0%)	Section 143.011 RSMo

Key results

Metric	Value
Revenue impact	-$6,524,096,463
Poverty rate	23.59% to 23.51% (-0.32%)
Child poverty rate	19.61% to 19.51% (-0.51%)
Winners	62.5%
Losers	0.0%

Decile impact

Decile	Relative Change	Avg Benefit
1	+0.05%	$6
2	+0.57%	$153
3	+0.46%	$176
4	+0.71%	$344
5	+1.08%	$658
6	+1.80%	$1,349
7	+2.38%	$2,153
8	+2.93%	$3,239
9	+3.24%	$4,699
10	+3.83%	$32,248

District impacts

District	Avg Benefit	Winners	Losers	Poverty Change
MO-1	$2,685	63%	0%	-0.29%
MO-2	$4,175	62%	0%	-0.46%
MO-3	$3,433	64%	0%	-0.09%
MO-4	$2,834	62%	0%	-0.74%
MO-5	$2,692	63%	0%	-0.18%
MO-6	$2,988	63%	0%	-0.20%
MO-7	$2,655	62%	0%	-0.20%
MO-8	$2,780	62%	0%	-0.43%

Reform parameters JSON

{
  "gov.states.mo.tax.income.rates.brackets[0].rate": {
    "2027-01-01.2100-12-31": 0
  },
  "gov.states.mo.tax.income.rates.brackets[1].rate": {
    "2027-01-01.2100-12-31": 0
  },
  "gov.states.mo.tax.income.rates.brackets[2].rate": {
    "2027-01-01.2100-12-31": 0
  },
  "gov.states.mo.tax.income.rates.brackets[3].rate": {
    "2027-01-01.2100-12-31": 0
  },
  "gov.states.mo.tax.income.rates.brackets[4].rate": {
    "2027-01-01.2100-12-31": 0
  },
  "gov.states.mo.tax.income.rates.brackets[5].rate": {
    "2027-01-01.2100-12-31": 0
  },
  "gov.states.mo.tax.income.rates.brackets[6].rate": {
    "2027-01-01.2100-12-31": 0
  },
  "gov.states.mo.tax.income.rates.brackets[7].rate": {
    "2027-01-01.2100-12-31": 0
  },
  "gov.states.mo.tax.income.rates.brackets[8].rate": {
    "2027-01-01.2100-12-31": 0
  }
}

Versions

• PolicyEngine US: 1.591.1
• Dataset: policyengine-us-data 1.48.0
• Computed: 2026-03-19T19:06:47.056116+00:00