Missouri's 2027 Tax Credits for Critical Materials and Pharmaceuticals
by Will Ramirez, on Nov 14, 2026, 7:00:00 AM
States are increasingly building incentives around supply chain security, and Missouri’s latest program is a focused example. Although it carries a broad name, its eligibility is specific.
For companies in the critical materials and critical pharmaceuticals space, Missouri has created a dedicated credit that will be available beginning with the 2027 tax year.
Recent Program Activity: What Changed
The Missouri Defense and Energy Independence Act was enacted in the 2026 session as Senate Bill 1553 and is codified at Section 620.1641. It authorizes a tax credit for a qualified company that undertakes eligible production or processing of critical materials or critical pharmaceuticals, for qualified costs incurred on or after January 1, 2027, and for tax years beginning on or after that date. Critical materials and critical pharmaceuticals are defined by reference to federal lists, and a qualified company must be registered to do business in Missouri and be a nontraditional defense contractor as defined in federal law. A defense, energy, or similar connection alone is not sufficient. The qualified company definition also excludes a company headquartered in a country identified as a United States national security risk in at least one of the three most recent annual threat assessments issued by the Director of National Intelligence.
The credit amounts are set by statute. The credit is 20 percent of qualifying costs for a company that incurs at least $5 million but below $15 million in qualifying costs, and 25 percent for a company that incurs at least $15 million. Authorizations are capped at $40 million per fiscal year, and the Department of Economic Development administers the program. The credit is nonrefundable, transferable under statutory procedures, and may be carried forward for up to ten years. The credit program is scheduled to sunset on December 31, 2036, subject to reauthorization.
Qualifying costs cover the construction, expansion, or conversion of facilities and the acquisition of equipment for producing critical materials or critical pharmaceuticals. Where a project uses a contractor, the costs count only if the contractor is selected through an open bidding process, is headquartered in Missouri, uses a workforce for the work performed for the qualified company that is at least 85 percent Missouri residents, and maintains an existing United States Department of Labor registered apprenticeship program. These conditions can materially affect whether a project’s costs qualify.
Why It Matters
Critical materials and critical pharmaceuticals are central to current supply chain and national security concerns, and Missouri has created a specific tool to attract that production. The structure, from the 20 percent and 25 percent rates to the $40 million annual cap, signals a program aimed at substantial projects within a defined category rather than broad-based recruitment.
For companies in this category, the program adds Missouri to the states competing for critical materials and pharmaceuticals investment, and the credit can be weighed alongside Missouri’s expanded manufacturing sales tax exemption, local incentives, and other programs.
What Companies Should Do
Companies considering a critical materials or critical pharmaceuticals project should first confirm that they meet the qualified company definition, including the nontraditional defense contractor requirement, and that their product falls within the federal critical materials or critical pharmaceuticals lists. They should then confirm how qualifying costs and the contractor conditions apply with the Missouri Department of Economic Development, and align the timing of costs with the January 1, 2027 eligibility date.
Eligibility is not the same as an award. The program requires a notice of intent, Department approval, and a written agreement with compliance and potential clawback terms, and credits are subject to the annual cap. Early engagement with the Department is the best way to understand the process.
How SSG Can Help
Site Selection Group helps companies evaluate targeted state incentive programs like Missouri’s as part of location and investment decisions. We assess how a program’s eligibility and mechanics apply to a specific project, compare Missouri against competing states, and help clients coordinate with the agencies that administer these credits.
