Tax credits, also known as tax expenditures, reduce the tax burden of individuals and entities and result in a reduction of state income. Tax credits are intended to stimulate or encourage specific sectors, entities, or behavior. Unlike spending programs, tax credits have less oversight, legislative control, or accountability, and often do not require the same periodic legislative reauthorization or even review.
Missouri currently administers 69 tax credit programs across multiple departments. Of these, 58 are still authorized and have not been sunset. The remaining 11 have outstanding redemptions which taxpayers will claim in the coming years. Departments have control over tax credit issuances but are typically constrained by authorization and issuance amounts set by statute.
In 2024, Missouri authorized $518.5 million in tax credits, issued $429.6 million of those, and saw more than $906.9 million redeemed.
The SALT Parity Act to reduce double taxation for businesses has the highest dollar amount of redemptions, at more than $396 million. This is trailed by the next highest redemption amount for the Missouri Works Credit, which is the combination of four credit programs, at $114 million. The Low-Income Housing Tax Credit follows with nearly $99 million in redemptions. On the opposite end of the spectrum, 21 credits had no redemptions in 2024. Of these, 12 are still active and have not been sunset.
States typically focus on sunset measures as a way to manage tax credits and force periodic reviews. Research suggests that tax credits are most effective when they are tailored to meet a specific need over a defined time frame. However, it also suggests that sunsets benefit entities with resources to continually lobby for reauthorization.
Over time, Missouri’s tax credits have increased slightly as a portion of the budget. In 1998 tax credits were equivalent to approximately 1.7% of state revenue, while by 2012 they amounted to more than 7%, and in 2024 make up roughly 6%.
Tax credits and their impacts are difficult to compare. The only thing all tax credits have in common is they reduce tax liability. Several frameworks have been developed to assess the direct and indirect impacts of tax credits, and these are discussed in this report.
Finally, while departments administer credits, the Missouri legislature is ultimately responsible to its constituents for the oversight and management of tax credits.
Read the full report by clicking the Download PDF button (left).
Download the excel file containing all tax credit information here: Tax Credit Report Data (xlsx)
