Call it a miracle, a God send, fairness, or what you will, seniors in Missouri will be able to breathe a little easier knowing that new legislation called the Senior Tax Justice Act is putting an end to the state's tax on non-private retirement income, ultimately benefiting retired teachers, firefighters, police officers, military personnel, federal employees and railroad workers.
Governor Matt Blunt recently signed the new law into effect, assuring Missourians that the legislation will not only help senior citizens within the state, but will also benefit the economy as a whole, adding that the state may come to be more appealing to in-state and out-of-state retirees who may have not previously thought of Missouri as a place for them to spend retirement years.
According to Missouri District 162 state Rep. Dr. Terry Swinger, D-Caruthersville, before the legislation, unmarried individuals with an annual income of $25,000 or less, and married individuals with an income of $32,000 were already exempt from paying income tax on their Social Security benefits. However, the new law increases the exemptions, serving as what most will refer to as a tax cut for the middle class.
Now, seniors in Missouri who are single and have incomes under $85,000, or married couples in the state with an income of $100,000 or less qualify for the tax cut.
Before the new law, Missouri was one of only 15 states that taxed seniors' Social Security income. The new legislation in Missouri has created a following, with other states like Iowa and Wisconsin joining in and also ending the tax on these incomes regarding their senior residents.
For Robert and Betty Bradley of Senath, Mo., that is a miracle.
Betty Bradley, a retired first-grade school teacher, said that before the new legislation, she and her husband had been considering relocating out-of-state to avoid the burdens the state tax placed on them.
"The state taxes were just eating us alive," she said. "We are really thankful for what the state has done regarding this matter."
Bradley said that for them, the new legislation was a miracle, sent from God. Together, she and her husband prayed for a change, and change has come.
"It's just a miracle. An answered prayer," Bradley said.
Blunt said in a press release that the sense of fairness the legislation creates for seniors in Missouri is equally, if not even more important that the bills' expected economic benefit.
"Missouri's tax on Social Security benefits is an unjust cut on Missourians' hard earned income. Like many other challenges this is not a problem we created, but it is a problem we have solved," Gov. Blunt said in a written statement on his Web site . "For too long Missouri's social security tax has kept seniors from receiving the benefits they earned. I am pleased to sign the Senior Tax Justice Act ending the Social Security cut for tens of thousands of Missouri seniors."
Representative Swinger added on Monday, that although the complete exemption will not go into effect immediately, with only 20 percent of senior Social Security benefits being exempt from income taxation this year, over the next six years, however, that percentage will increase until 2012.
By that time, the cost of the tax cut is expected to be upwards of $150 million a year to the state.