The future of a popular Missouri tax deduction could depend on whether the Internal Revenue Service decides to delete a line on a future filing form.
In the current tax season and in prior years, individual tax-filers have been able to deduct several thousand dollars from their tax liability for themselves, their spouses and their children. This deduction is known as the personal exemption.
The Tax Cuts and Jobs Act Congress passed last year changes that. Among numerous changes to the U.S. tax code, the act reduces the value of the exemption amount to $0 for the next several years, but doesn’t delete it outright.
The Missouri Department of Revenue has taken the position that Missourians will not be able to claim either a federal or state personal exemption deduction going forward.
However, the way Congress altered the federal personal exemption leaves questions about Missouri’s equivalent, tax analysts say. And it could create a windfall for taxpayers while reducing expected state revenue by hundreds of millions of dollars.
Joseph Haslag, an economist at the University of Missouri in Columbia who has provided analysis for the state, estimated that eliminating the federal and state personal exemptions would mean Missouri collects about $439 million extra from taxpayers.
Read more: Springfield News-Leader