Blunt, Nixon want to exempt federal rebates from state taxes

JEFFERSON CITY, Mo. (AP) -- Gov. Matt Blunt and Attorney General Jay Nixon agree on the need to exempt federal tax rebates from being taxed by the state.

A proposal pending in Congress could provide tax rebates of up to $600 for each income earner as a way to help stimulate the economy.

Unless state law is changed, those federal tax rebates could be counted as income by Missouri. So Missourians could see their state taxes rise.

The Republican governor and Democratic attorney general both are calling upon Missouri lawmakers to exempt the federal refund checks from state income taxes.

Missouri lawmakers enacted a similar exemption in 2001, when the federal government provided tax rebates of up to $300 per individual and $600 for couples.