The United States Senate will soon consider a major revision of the U.S. tax code that would, by 2027, raise federal taxes on many low- and middle-income Missourians.
In order to pay for permanent tax cuts for corporations, the bill would increase personal income tax rates after 2025 based on the “chained consumer price index” (a measure of inflation). As a result, in 2027, the bottom 60 percent of earners (or those with incomes of about $87,000 or less) would see their taxes increase.
Three separate, independent, nonpartisan analyses examined the impact of the bill over time and each found similar results. By 2027 Missourians will pay more overall in federal taxes, at the same time the federal deficit will increase.
- The Congressional Budget Office found that by 2027 those earning up to $75,000 per year would pay more in federal taxes than they do today.
- Similarly, the U.S. Congress’ Joint Committee on Taxation analysis found that by 2027 those with incomes up to $75,000 per year would face increased tax rates, while those with higher incomes would see their average tax rate drop compared to current law.
- The Institute on Taxation and Economic Policy found that the average taxpayer in the bottom 60% of Missourians would face a tax increase by 2027.
Overall, while a windfall for corporations and the very wealthiest, Missouri taxpayers would actually owe more in federal taxes in 2027 than they do under current law.
It is important to note that income breakdowns in Missouri counties do not directly reflect the breakdowns at the state level. That is, wealthier counties have more than their fair share of wealthy Missourians, and many counties have more residents at the lower end of the income scale.
Most Missourians have incomes below $75,000 annually, and would on average pay higher taxes in 2027. While the top 20 percent would see an overall tax cut, that group is not represented equally across the state.
As the chart on the following page illustrates, many counties, particularly in rural Missouri, have few high earning households. As such, overall tax increases would likely hit those areas especially hard.
|~Bottom 80%||Top 20%|
|# Returns||% of Returns||# Returns||% of Returns|
|Cape Girardeau County||27,220||77%||8,100||23%|
|New Madrid County||5,830||83%||1,220||17%|
|St. Charles County||125,090||65%||66,450||35%|
|St. Clair County||3,150||87%||470||13%|
|Ste. Genevieve County||6,320||76%||1,960||24%|
|St. Francois County||21,610||84%||4,140||16%|
|St. Louis County||355,870||70%||149,000||30%|
|St. Louis City||124,690||85%||21,650||15%|