HB 2535 — Authorizes a homestead tax exemption for certain veterans, and to offset lost property tax revenue, increases the cigarette tax and subjects alternative nicotine products, vapor products, tobacco paraphernalia, and hemp-derived consumable products to an excise tax

SECOND REGULAR SESSION HOUSE COMMITTEE SUBSTITUTE FOR HOUSE BILL NO.

2535 103RD GENERAL ASSEMBLY INTRODUCED4245H.06C BYJOSEPH REPRESENTATIVEENGLER, MAYHEW.Chief Clerk AN ACT To repeal sections 149.011, 149.015, and 149.160, RSMo, and to enact in lieu thereof five new sections relating to taxation.

4245H.02I JOSEPH ENGLER, Chief Clerk AN ACT To repeal sections 149.011, 149.015, and 149.160, RSMo, and to enact in lieu thereof five new sections relating to taxation.

SectionA.Section A.

(4) "Gold Star spouse", the surviving,surviving unmarried spouse of a veteran who wasis killedcertified inby action,the whoUnited diedStates fromDepartment woundsof receivedVeterans inAffairs combatas whilea servingrecipient onof activedependency duty, EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and isindemnity intendedcompensation tounder befederal omittedlaw; from the law.

EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is intended to be omitted from the law.

HCS HB 2535 2 or(5) who"Homestead", diedthe asreal aproperty resultactually ofowned diseasesand relatedoccupied toby aan presumedindividual toxicas exposurehis or injuryher dueprimary toresidence, aand presumednot toxicto exposureexceed whilefive servingacres onof activeland duty,surrounding andit whoas is certifiedreasonably bynecessary thefor Uniteduse States Department of Veteransthe Affairsdwelling as a recipienthome; of dependency and indemnity compensation under federal law;

(5) "Homestead", the real property actually owned and occupied by an individual as his or her primary residence, and not to exceed five acres of land surrounding it as is reasonably necessary for use of the dwelling as a home;

(1) For disabled veterans withwho aare disabilityPurple ratingHeart ofrecipients, thirty percent or more but less than fifty percent, the annual exemption shall be threeup to five thousand dollars foror athe disabilitytotal rating of thirty percent and such amount shall be increased in proportion to the percentage of the disabledproperty veteran'stax disabilitylevied ratingon forthe disabledqualified veteransresidence, withwhichever ais disabilityless; rating of more than thirty percent but less than fifty percent, not to exceed five thousand dollars;

and (2) For disabled veterans with a disability rating of fiftyseventy percent or more but less than seventy percent or PurpleGold HeartStar recipients,spouses, the annual exemption shallis beequal fiveto thousandone dollarshundred for a disability rating of fifty percent and such amount shall be increased in proportion to the percentage of the disabledproperty veteran'stax disabilitylevied ratingon forthe disabledqualified veteransresidence. with a disability rating of more than fifty percent but less than seventy percent, not to exceed ten thousand dollars;

and4. (3) For disabled veterans with a disability rating of seventy percent or more or Gold Star spouses, the annual exemption is equal to one hundred percent of the property tax levied on the qualified residence.

HBThe 2535exemption 3under 4.this section carries over to the benefit of the disabled veteran's or Purple Heart recipient's surviving spouse as long as the spouse holds the legal or beneficial title to the qualified residence and permanently resides therein.

The exemption underfor thisa sectionsurviving carriesspouse overshall remain proportional to the benefitdisabled veteran's disability rating as of the disabledtime of the veteran's orpassing, Purpleexcept Heartthat recipient'sif the surviving spouse asremarries, longthe asexemption theshall spousebe holdsreduced theby legalfifty orpercent beneficialeffective titlebeginning toin the qualifiedtax residence,year permanentlyin resideswhich therein,the andsurviving doesspouse notremarries. remarry.

NoThe exemptionprovisions shallof bethis allowedsubsection forshall thenot taxapply yearto ina whichGold theStar survivingspouse. spouse remarries.

The exemption for a surviving spouse shall remain proportional to the disabled veteran's disability rating as of the time of the veteran's passing.

(1)HCS SubmitHB an2535 application3 on(1) aPay formall provided by the county or city not within a county to the local assessor'sproperty ortaxes collector's office or other entity as directedrequired; by local rule or ordinance;

(2) IncludeSubmit documentationan thatapplication verifiesfor proofan ofexemption theon disabilitya rating,form includingprovided officialto documentationthe fromcommission theand Unitedany Statesother Departmentdocumentation ofor Veteransmaterials Affairs;required by the commission;

and (3) Include documentation that verifies proof of ownershipthe anddisability occupationrating, ofincluding official documentation from the primaryUnited residence.States Department of Veterans Affairs;

and (4) Include proof of ownership and occupation of the primary residence.

The collector'scommission office, assessor's office, or other entity designated by rule or ordinance shall review applications and determine eligibility of the residential property based on the criteria set forth under this section and by the application, visual inspection, questionnaire, or other reasonable methods.

The determination shall be made in accordance with guidelines established by the commission and any additional local rules or regulations.regulations promulgated by the commission.

County assessors and collectors shall record the total number and dollar amount of exemptions claimed and actually redeemed and the corresponding amount of tax revenues lost, if any, by reason of the exemption, and shall provide this information to the commission as required under subsection 9 of this section.

The governingcommission body of the county or city not within a county may adopt reasonable procedures and promulgate ordinances, rules, and regulations in order to implement and administer the provisions of this sectionsection. and comply with any additional requirements or regulations promulgated by the commission.

The state treasurer shall be the custodian of the fund and, in accordance with sections 30.170 and 30.180, shall approve disbursements of public moneys in accordance with distribution requirements and procedures developed HB 2535 4 by the commission as outlined by this section.

(2) Subject to appropriation, the commission shall use the moneys in the fund solely to reimburseprovide countiesfor full or citiespartial notexemptions, withinas aprovided countyunder this section, to reimburse disabled veterans, Purple Heart recipients, Gold Star spouses, and surviving spouses for verified property tax revenue lostpaid asup ato resultthe amount of exemptionsan exemption granted under this section.

The commission may retain an amount not to exceed one and one-half percent to offset the costs of administration of the provisions of this section.

A(3) countyNo commissionexemption mayreimbursement retainpayments upshall tobe onegranted percentfrom of the totalfund amountbefore reimbursedJanuary to1, the2028. county under this section as an administrative fee to defray the costs of processing exemptions, updating property tax records, and filing the certification required under this section.

(3)(4) EachExemption countyreimbursements collectorshall shall,be paid on ora beforerolling Septemberfirst-come, thirtiethfirst-served ofbasis eachamong year,all certifyqualified toeligible thetaxpayers, commissionsubject theto totalfull assessedverification valueand exemptedcompliance andwith the correspondingprovisions propertyof tax loss due to veteran exemptions under this sectionsection. for the preceding tax year.

TheIf the amount of exemptions claimed in a tax year exceeds the moneys in the fund, the commission shallmay verifydetermine suchthe certificationrules beforeand authorizingprocedures reimbursement.for payment of exemption reimbursements on a pro rata basis, holding payments until sufficient funds have accumulated in the fund and have been HCS HB 2535 4 appropriated to the commission for payment, suspension of applications and grants of exemptions until sufficient funds have accumulated, and payment of unpaid claims in chronological order.

(4)Any Theexemption commissionreimbursement shallunder submitthis ansection annualthat reportcannot onbe orpaid beforedue December thirty- first of each year to thea governor,lack the speaker of thefunds houseappropriated offor representatives,payment andshall thenot presidentconstitute proa temporeclaim ofagainst the senatestate. summarizing disbursements, the number of veterans assisted, and counties and cities not within a county reimbursed.

(5) NotwithstandingThe thecommission provisionsshall ofsubmit sectionan 33.080annual toreport theon contrary,or anybefore moneysDecember remainingthirty- infirst of each year to the fundgovernor, atthe speaker of the endhouse of representatives, and the bienniumpresident shallpro nottempore revertof tothe senate summarizing the creditexemptions ofgranted, disbursements, and the generalnumber revenueof fund.veterans assisted.

(6) TheNotwithstanding statethe treasurerprovisions shallof investsection 33.080 to the contrary, any moneys remaining in the fund inat the sameend mannerof asthe otherbiennium fundsshall arenot invested.revert to the credit of the general revenue fund.

(7) The state treasurer shall invest moneys in the fund in the same manner as other funds are invested.

The Missouri veterans' commission is authorized to coordinate with or negotiate a memorandum of understanding with the state tax commission in order to effectuate the provisions of this section and may promulgate all necessary rules and regulations for the administration of this section.

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 HB 2535 5 a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2026, shall be invalid and void.

HCS HB 2535 5 144.1420.

As used in this section, the term "hemp-derived consumable product" shall mean any product intended for human consumption, ingestion, absorption, inhalation, or topical administration,administration that is manufactured from hemp or hemp extract and contains cannabinoids including, but not limited to, Delta-8delta-8 tetrahydrocannabinol, Delta-9delta-9 tetrahydrocannabinol, Delta-10delta-10 tetrahydrocannabinol, hexahydrocannabinol (HHC), tetrahydrocannabiphoral (THCP), or any other intoxicating cannabinoid or isomer, regardless of whether the product meets the federal definition of hemp.

The term shall include consumable hemp products in the form of beverages, shots, drink mixes, edibles, tinctures, oils, vapes, inhalation products, or other ingestible or inhalable forms but shall not include industrial hemp fiber, seed, textiles, animal bedding, hempcrete, rope, non-consumablenonconsumable hemp products, or any product regulated as a drug by the United States Food and Drug Administration.

Any rule or portion of a rule, as that HB 2535 6 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.

HCS HB 2535 6 (1) "Alternative nicotine product", the same meaning as such term is defined under section 407.925;