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Nixon signs small-business tax break
JEFFERSON CITY, Mo. -- Additional small businesses will be allowed to claim a Missouri tax deduction for adding new jobs under legislation signed Wednesday by Gov. Jay Nixon.
The new law ensures the income tax deduction can be claimed by all types of small businesses -- as originally intended when lawmakers passed a similar measure last year.
The Department of Revenue interpreted the 2011 law as applying only to certain types of companies. So lawmakers tried again in 2012, passing a bill listing the types of small business that qualify for the tax deduction, which can be claimed based on the number of jobs created.
Nixon trumpeted the 2012 bill during signing ceremonies Wednesday at the Bloch School of Entrepreneurship and Innovation at the University of Missouri-Kansas City and at the Joplin Area Chamber of Commerce. That came after Nixon's administration last week cited the tax break legislation as one of several measures that had contributed to a projected state budget shortfall. The governor trimmed $15 million from the 2013 fiscal year budget that takes effect Sunday.
"Missouri is a national leader in supporting and nurturing startup businesses, and this targeted tax deduction is another valuable tool to help your businesses reach new heights," Nixon said in a written statement. "By helping our small businesses create new jobs and grow, we will keep Missouri's economy moving forward."
Rep. Denny Hoskins, who sponsored both the original legislation and this year's clarification, said all small businesses should be eligible for the tax deduction and that it had been interpreted too narrowly. Hoskins, who is a certified public accountant, called the proposal a "hidden gem meant for small businesses."
"Regardless of complications with the wording of the bill in their mind, I wanted to make sure our small businesses were able to take advantage of this and create more jobs," said Hoskins, R-Warrensburg.
Under the legislation, businesses can claim a $10,000 state income tax deduction for each new full-time job created. The tax deduction doubles if the business also pays half the new workers' health insurance premiums. The deductions previously were estimated to translate into a tax break of $600 to $1,200 per job.
Brad Jones, with the National Federation of Independent Business, said the deductions could help offset a variety of business costs. He said adding even a little money back into the pockets of small business owners will help.
"We certainly are supportive of it. It's a great clarification of the bill, and I think it will take any question out of the minds of the Department of Revenue," Jones said.