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HB 1739

Modifies provisions relating to the "Missouri Working Family Tax Credit Act", making the tax credit refundable

2026 Regular Session Introduced by Kemp Strickler

The Missouri Working Family Tax Credit becomes refundable for tax years starting 2027, expanding relief for low-income households by allowing excess credits to be paid back.

Referred: Emerging Issues(H)
#revenue #departmentof #taxcredits #taxationandrevenue-general #taxationandrevenue-income
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Bill Summary · HB 1739

Summary — HB 1739 (Missouri): Missouri Working Family Tax Credit Act — Make credit refundable

Status: Enacted (listed as Act 814; enrolled April 2025).
Filed: January 6, 2025. Sponsors: Sen. Dees, Rep. M. Brown.

Purpose

To amend the "Missouri Working Family Tax Credit Act" (section 143.177, RSMo) to (1) make the state working family tax credit refundable for tax years beginning on or after January 1, 2027, and (2) specify the credit amount, indexing conditions for increasing the credit, administrative duties of the Department of Revenue, and reporting and rulemaking provisions.

Key provisions

  • Definitions

    • "Eligible taxpayer": Missouri resident (filing single, head of household, widowed, or married filing combined), subject to Missouri income tax (excludes withholding-only filers), who is allowed the federal Earned Income Tax Credit (EITC) under 26 U.S.C. §32.
    • "Tax credit": credit against Missouri income tax (not withholding).

  • Credit amount and structure

    • The Missouri credit equals a percentage of the taxpayer's federal EITC (as that federal credit existed on January 1, 2021).
    • Initial percentage: 10% of the federal EITC.
    • The percentage may be increased up to a maximum of 20% subject to a revenue trigger (see below). Any increase takes effect January 1 of a calendar year and applies to tax years beginning on or after that date.

  • Refundability

    • For tax years beginning on or before December 31, 2026: excess credit (amount exceeding tax liability) is nonrefundable and may not be carried forward.
    • For tax years beginning on or after January 1, 2027: credits issued under the section are refundable (i.e., excess is returned to taxpayer).

  • Revenue-triggered increase

    • An increase (from 10% toward 20%) may occur only if net general revenue in the prior fiscal year exceeds the highest net general revenue of any of the three preceding fiscal years by at least $150 million.

  • Administration and outreach

    • The Department of Revenue shall determine whether filers who did not claim the credit may qualify and notify potential eligibles.
    • In making eligibility determinations the department may use IRS, Treasury, and prior state return data.

  • Reporting and rulemaking

    • The department must prepare an annual report with statistics: total revenue expended, number of credits claimed, average credit value by income ranges, etc.
    • Director may promulgate administrative rules under Chapter 536 (with a nonseverability clause tied to Chapter 536 rulemaking oversight).

  • Other

    • Credits under this section are not subject to the requirements of sections 135.800–135.830 (statutory reference retained in text).

Who is affected

  • Primary beneficiaries: low- to moderate-income Missouri residents who qualify for the federal EITC. Making the state credit refundable increases benefits especially for taxpayers with little or no Missouri income tax liability (e.g., very low-income households).
  • State fiscal impact: refundable credits increase state cash outlays compared with nonrefundable credits; the bill includes a built-in mechanism (revenue trigger) to limit expansion to periods of stronger state revenues.
  • Administrative impact: Department of Revenue will implement outreach, eligibility matching using federal/state data, and annual reporting.

Fiscal and procedural notes

  • The bill was passed and enrolled in April 2025 and is referenced as Act 814.
  • The key operative change (refundability) applies to tax years beginning on or after January 1, 2027; any percentage increase to the credit requires meeting the specified net general revenue test.
  • The department is authorized to adopt rules to administer the program, subject to Chapter 536 requirements.

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

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