Sponsor seeks to let Missouri businesses expense research and development costs in year incurred

Representative Doyle Justice told the Ways and Means Committee that House Bill 136 would decouple Missouri taxable treatment from federal Section 174 so companies can expense research-and-development costs in the year incurred rather than amortizing them over multiple years. "Currently, Missouri taxpayers are unable to deduct some research and experimentation or research and development expenses off of their income taxes ... This will be the third year then that these businesses won't be able to use this deduction or expense," Justice said, describing a constituent whose tax bill exceeded net profit because R&D costs could not be expensed in the year paid.

Supporters including Ray McCarty of Associated Industries of Missouri and Jared Hankinson of the Missouri Chamber testified the change would benefit manufacturers, technology firms and other companies investing in R&D. McCarty said the proposed state change would add-back any federal-level deduction to prevent a double benefit and stressed that other states have decoupled to remain competitive. "This would just decouple, and there's a provision in there to make sure it's not a double dip so you don't get double credit," McCarty said.

Committee members asked about which firms would benefit and how many employees those firms employ; Justice described an example firm, Tri Tech Electronics, with roughly 50–70 employees that assembles electrical control systems and does in-house engineering. Witnesses said a range of firms from small suppliers to large aerospace or pharmaceutical manufacturers could be affected. No opposition witnesses registered in the hearing record; the committee did not record a vote.