§ 143.1160 RSMo — Long-term dignity savings account tax deduction — definitions — deduction amount — rulemaking authority — sunset provision

1. As used in this section, the following terms mean:

(1) "Account holder" , the same meaning as that term is defined in section 191.1603 ;

(2) "Deduction" , an amount subtracted from the taxpayer's Missouri adjusted gross income to determine Missouri taxable income for the tax year in which such deduction is claimed;

(3) "Eligible expenses" , the same meaning as that term is defined in section 191.1603 ;

(4) "Long-term dignity savings account" , the same meaning as that term is defined in section 191.1603 ;

(5) "Qualified beneficiary" , the same meaning as that term is defined in section 191.1603 ;

(6) "Taxpayer" , any individual who is a resident of this state and subject to the income tax imposed under this chapter, excluding withholding tax imposed under sections 143.191 to 143.265 .

2. For all tax years beginning on or after January 1, 2021, a taxpayer shall be allowed a deduction of one hundred percent of a participating taxpayer's contributions to a long-term dignity savings account in the tax year of the contribution. Each taxpayer claiming the deduction under this section shall file an affidavit with the income tax return verifying the amount of their contributions. The amount of the deduction claimed shall not exceed the amount of the taxpayer's Missouri adjusted gross income for the tax year that the deduction is claimed, and shall not exceed four thousand dollars per taxpayer claiming the deduction, or eight thousand dollars if married filing combined.

3. Income earned or received as a result of assets in a long-term dignity savings account shall not be subject to state income tax imposed under this chapter. The exemption under this section shall apply only to income maintained, accrued, or expended pursuant to the requirements of sections 191.1601 to 191.1607 , and no exemption shall apply to assets and income expended for any other purpose. The amount of the deduction claimed shall not exceed the amount of the taxpayer's Missouri adjusted gross income for the tax year the deduction is claimed.

4. If any deductible contributions to or earnings from any such programs referred to in this section are distributed and not used to pay for eligible expenses or are not held for the minimum length of time under subsection 2 of section 191.1605 , the amount so distributed shall be added to the Missouri adjusted gross income of the account holder or, if the account holder is not living, the qualified beneficiary, in the year of distribution.

5. The department of revenue shall promulgate rules to implement the provisions of this section. Any rule or portion of a rule, as that term is defined in section 536.010 , that is created under the authority delegated in this section shall become effective only if it complies with and is subject to all of the provisions of chapter 536 and, if applicable, section 536.028 . This section and chapter 536 are nonseverable and if any of the powers vested with the general assembly pursuant to chapter 536 to review, to delay the effective date, or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2020, shall be invalid and void.

6. Under section 23.253 of the Missouri sunset act:

(1) The provisions of the new program authorized under this section shall automatically sunset on December thirty-first four years after August 28, 2020, unless reauthorized by an act of the general assembly;

(2) If such program is reauthorized, the program authorized under this section shall automatically sunset on December thirty-first four years after the effective date of the reauthorization of this section; and

(3) This section shall terminate on September first of the calendar year immediately following the calendar year in which the program authorized under this section is sunset.