JEFFERSON CITY (AP) – Republican Gov. Mike Parson signed an income tax cut into law Wednesday.

While signing the income-tax-cut legislation Wednesday, Missouri Gov. Mike Parson said the estimated $760 million reduction, when fully phased in, will be “the largest tax cut in the state’s history.”

Under previous law, Missouri’s top individual income tax rate already was scheduled to fall from 5.3% to 5.2% in January, with the potential to gradually drop to 4.8% if revenue-growth triggers were met in future years. The new law will cut the tax rate to 4.95% in January and exempt the first $1,000 of income from taxation. The tax rate could drop to 4.8% as soon as 2024, if state tax revenue grows by at least $175 million over the high mark of the previous three years.

Missouri’s new law also authorizes three additional annual tax cuts that could eventually reduce the tax rate to 4.5%. Each reduction would occur only if state revenue grows by an inflation-adjusted $200 million over the high mark of the previous three years while also exceeding an inflation-adjusted baseline.

About two-thirds of U.S. states have adopted some sort of tax relief this year. The tax-cut trend has been fueled by record state surpluses and large growth in state revenues after an initial downturn during the coronavirus pandemic. Missouri became the latest state to act

Parson said the cuts amount to a 5% reduction in people’s taxes. The nonprofit Missouri Budget Project estimates that a household earning $30,000 annually would save $17 next year, and $29 once the law is fully phased in. For a household earning $152,000 annually, first-year savings would be $348 and eventual savings would reach $759.

Parson also signed a law Wednesday authorizing $40 million of annual agricultural tax breaks benefitting meat processing facilities, urban farmers and biofuel retailers, among others.