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Compliance May 9, 2007
Missouri Senate Returns Benefits Exemption Legislation to House
May 9, 2007 (PLANSPONSOR.com) - The Missouri state
Senate passed a tapered-back version of an income tax
exemption on Social Security benefits and some retirement
benefits, according to reports from the Associated
Press.
Reported by Adrien Martin
Those whose income – minus half of what they are entitled to with Social Security – is below the $25,000 marker for individuals or $32,000 for a couple, are not required to pay state income taxes on their Social Security benefits.
The Senate bill raises the income exemption threshold and allows for relief for those with incomes above $100,000. In particular, the Senate version would increase income exemptions to $85,000 for individuals and $100,000 for couples, and some whose income lands above that would still get some tax relief because their Social Security benefits would be taxed based on how much their income exceeds the $85,000 or $100,000 caps.
Currently, pensions up to $6,000 also are not taxed. The pension exemption included in the legislation would cover those who opt out of the Social Security system and do not receive benefits through the federal program, which includes teachers, firefighters, police officers, military personnel, federal employees and railroad workers.
The Senate version, if passed, puts the cost of the exemption at about $181 million by the time it is fully phased in, in 2012 – a far lesser cost than the House version, which was estimated to cost at least $285 million.
According to the AP, retirement benefits would not be tax exempt until the retiree turns 62, but disability benefits would be exempt at any age.
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