HB 412 -- INCOME TAX DEDUCTION FOR MILITARY RETIREMENT

SPONSOR:  Wasson

COMMITTEE ACTION:  Voted "do pass" by the Committee on Veterans
by a vote of 11 to 0.

This bill authorizes an individual income tax deduction for any
military retirement benefits received by a taxpayer that has not
already been deducted or excluded from his or her federal
adjusted gross income.  The deduction is phased in at the rate of
20% per year for a period of five years, beginning January 2006.
The current limited deduction for military retirement benefits is
removed in lieu of the full deduction.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of $821,539
in FY 2006, $3,332,170 in FY 2007, and $6,704,000 in FY 2008.  No
impact on Other State Funds in FY 2006, FY 2007, and FY 2008.

PROPONENTS:  Supporters say that the bill will help retain
military retirees in Missouri.  Military personnel typically
retire in their 40s and take post-retirement jobs on which they
pay income taxes.  They buy homes and cars on which they pay
property taxes.  Military retirees are the kind of people you
want in your community because they are law-abiding people who
join civic organizations, coach little league, and go to church.
The military pay that would be relieved of taxes as a result of
the bill is only about $16,000.  The potential exists for the
bill to be revenue neutral because the amount of property and
income taxes being paid by military retirees will exceed the
amount of revenue lost through untaxed military retirement
benefits.  This is an opportunity to provide military retirees a
small amount of compensation and to honor those who have served.

Testifying for the bill were Representative Wasson; Sergeant
Major George Cutbirth (ret.); Missouri Association of Veterans
Organizations; General Fred Marty (ret.); and American Legion.

OPPONENTS:  There was no opposition voiced to the committee.

Alice Hurley, Legislative Analyst

Missouri House of Representatives
93rd General Assembly, 1st Regular Session
Last Updated August 25, 2005 at 1:19 pm