Two years ago, Missouri eliminated the corporate franchise tax for thousands of small businesses when it raised the "outstanding shares and surplus" threshold amount used to calculate the annual tax from $1 million to $10 million. Now, the Missouri franchise tax will be eliminated for all businesses by 2016.
Under legislation signed by Gov. Jay Nixon on April 26 (S.B. 19), the corporate franchise tax rate will gradually be reduced as follows over a five-year period beginning in 2012 until the tax is completely phased out in 2016:
<u>Tax Year</u> <u>Corporate Franchise Tax Rate</u>
2011 1/30 of 1 percent
2012 1/37 of 1 percent
2013 1/50 of 1 percent
2014 1/75 of 1 percent
2015 1/150 of 1 percent
2016 Tax Eliminated
In addition, the legislation also caps corporate franchise tax liabilities for tax years beginning after 2010 at the amount of each corporation's tax liability for the 2010 tax year (i.e., a company's franchise tax liability is limited to no more than what it owed in the 2010 tax year). Therefore, if a corporation had no franchise tax liability in 2010 because the it was not doing business in the state or did not exist, then its annual franchise tax liability will be limited to the amount of its corporate franchise tax liability for its first full taxable year of existence.
According to Gov. Nixon, eliminating the franchise tax will "encourage businesses to expand their operations and create jobs in Missouri, boosting economy and making state more competitive for years to come."</div>