Missouri authorizes new tax credit for self-employed taxpayers starting July 2026

On April 9, 2025, the Missouri State Legislature introduced House Bill 1007, a significant piece of legislation aimed at providing tax relief for self-employed individuals in the state. This bill seeks to address the financial challenges faced by self-employed taxpayers who are currently ineligible for certain federal income tax deductions related to health insurance.

**Key Provisions of House Bill 1007**

The bill proposes a tax credit for self-employed taxpayers whose federal income tax liability is impacted by their health insurance payments. Specifically, it allows these individuals to claim a credit against their Missouri income tax, provided their tax liability is under $3,000. However, the credits are nontransferable and nonrefundable, meaning they cannot be sold or carried over to future tax years. This provision aims to offer some financial relief to self-employed individuals who often bear the full burden of their health insurance costs.

Additionally, the bill establishes a cap on the total amount of tax credits that can be issued annually, based on the highest amount issued in previous fiscal years from 2023 to 2025. This cap is intended to manage the fiscal impact of the credits on the state budget.

**Debate and Opposition**

While the bill has garnered support from various advocacy groups representing small business owners and self-employed individuals, it has also faced scrutiny. Critics argue that the nonrefundable nature of the credits may limit their effectiveness, as many self-employed individuals may not benefit fully if their tax liabilities are low. Furthermore, concerns have been raised about the potential long-term fiscal implications of the credits, especially given the sunset provision that would require reauthorization by the legislature by December 31, 2028.

**Economic and Social Implications**

House Bill 1007 could have significant economic implications for Missouri's self-employed workforce, which has been growing in recent years. By providing tax relief, the bill aims to support these individuals in managing their health care costs, potentially leading to increased economic stability and growth within this sector. Socially, the bill addresses a pressing need for affordable health insurance options, which is crucial for the well-being of self-employed individuals and their families.

**Conclusion**

As House Bill 1007 moves through the legislative process, its potential to impact the lives of self-employed Missourians remains a focal point of discussion. With its introduction, lawmakers are taking steps to address the financial burdens faced by this vital segment of the workforce, while also navigating the complexities of state budgeting and fiscal responsibility. The coming months will be critical in determining the bill's fate and its implications for the future of self-employment in Missouri.