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Bill Summary · HB 2616

Summary of HB 2616 (2026) — Missouri Working Family Tax Credit Act; Refundability

Purpose and intent

  • Replaces the current Missouri Working Family Tax Credit Act framework with a modified structure and establishes refundable treatment for the credit beginning in tax years starting on or after January 1, 2027.
  • The bill aims to expand access to the Missouri Working Family Tax Credit by making it refundable for later tax years, thereby possibly increasing net benefits to eligible taxpayers.

Key provisions and changes

  • Definition and eligibility

    • Creates a defined framework for the “Missouri Working Family Tax Credit Act.”
    • An “eligible taxpayer” is a resident individual with filing status of single, head of household, widowed, or married filing jointly who pays Missouri income tax (excluding withholding) and who is eligible for the federal Earned Income Tax Credit (EITC) under 26 U.S.C. Section 32 as of the relevant year.
    • A “tax credit” is a credit against Missouri income tax liability (excluding withholding).

  • Credit amount and timing (initial year and growth)

    • Beginning with the 2023 calendar year, eligible taxpayers may receive a Missouri tax credit equal to a percentage of the amount they would receive under the federal EITC as of January 1, 2021, subject to certain percentages.
    • The tax credit is claimed when filing the Missouri return and reduces the state income tax liability after other credits.
    • For tax years through December 31, 2026, any excess of the credit over tax liability is nonrefundable and cannot be carried forward.
    • Starting with tax years beginning January 1, 2027 and thereafter, the credit becomes refundable (i.e., can generate a refund beyond tax liability).

  • Percentage structure and increases

    • The base credit is 10% of the eligible federal EITC amount, with the potential to increase to 20%.
    • The maximum allowed credit for a given taxpayer is 20% of their eligible federal EITC amount.
    • Increases (from 10% toward 20%) occur in steps and take effect on January 1 of a calendar year; any increase applies only to tax years beginning after the effective date.

  • Trigger for percentage increases

    • Any increase in the credit percentage is conditional on state general revenue receipts:
    • The amount of net general revenue collected in the previous fiscal year must exceed the highest net general revenue collected in any of the three prior fiscal years by at least $150 million.
    • If the revenue condition is not met, the percentage remains unchanged (i.e., no automatic increase).

  • Administrative provisions

    • The Department of Revenue is authorized to identify taxpayers who did not apply for the credit but may qualify, and to notify them of potential eligibility using available data (e.g., from IRS, U.S. Treasury, and prior Missouri returns).
    • The Department must prepare an annual report detailing:
    • Total revenue expended on the credits
    • Number of credits claimed
    • Average credit value by income ranges
    • The Director may promulgate rules to administer the section, subject to applicable state rulemaking requirements.

  • Miscellaneous

    • Credits under this section are not subject to certain other sections (135.800 to 135.830) of statute.
    • The act provides codified severability and rulemaking provisions to ensure consistent administration.

Who would be affected

  • Eligible taxpayers: Missouri residents with eligible filing statuses who qualify for the federal EITC would be eligible for the Missouri tax credit.
  • Low- to moderate-income households: Likely to benefit most, as credits are tied to EITC amounts and, beginning in 2027, would become refundable, increasing potential net support.
  • Missouri Department of Revenue: Responsible for implementation, outreach to potential eligibles, annual reporting, and rulemaking.

Procedural and timeline aspects

  • Effective and operative dates
    • Credit calculations and existing nonrefundable period apply from 2023 through 2026.
    • Refundability becomes effective for tax years beginning on or after January 1, 2027.
  • Revenue-based triggers for increases
    • Percentage increases to the credit (from 10% up to 20%) depend on a defined net general revenue surplus threshold (at least $150 million over the highest prior three-year total).
  • Reporting and oversight
    • Annual department reports on credit usage and revenue impact.
    • Rulemaking authority for administration of the credit is granted to the Department of Revenue.

Bottom line

HB 2616 would transform the Missouri Working Family Tax Credit by (a) maintaining a credit tied to the federal EITC amount with a tiered 10%–20% structure, (b) allowing refundable credits beginning in 2027, and (c) tying any future increases in credit rate to a state revenue condition. The bill emphasizes targeted support for lower- and middle-income Missouri residents who are eligible for federal EITC, while adding administrative mechanisms for eligibility outreach and annual reporting.

Compiled from official sources — confirm details with the bill’s official record.

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