To Gov. Mike Kehoe, Missouri is falling behind other states.
“When we’re competing against states like Tennessee and Texas, states with no individual income tax, too often the conversation ends before it truly begins,” Kehoe said at his “State of the State” address in January.
Kehoe believes the answer is eliminating the income tax, which he says will drive business and growth to Missouri.
At his urging, the Missouri General Assembly, this spring passed a framework to usher out the state individual income tax this spring. Missourians will get their say when they head to the polls for the primary election on Tuesday, Aug. 4.
If passed, Amendment 5 would instruct the Missouri General Assembly to phase out the income tax. But it wouldn’t all happen right away. The tax would be reduced and eventually eliminated over the course of several years, and would ban the state from implementing income taxes in the future.
However, the income tax makes up approximately 65% of Missouri’s budget. Under the amendment, lawmakers would be authorized to expand what goods and services can be taxed, or increase existing sales and use tax rates, for the purpose of making up that lost revenue.
However, exactly how sales and use taxes will change is currently unknown. The amendment does not outline specific changes — it only pre-authorizes the General Assembly to make them without additional voter approval.
What Amendment 5 would do
The ballot measure reads as follows:
“Shall the Missouri Constitution be amended to:
- Require legislative phase-out of the individual state income tax based on revenue growth, and authorize the expansion of sales and use taxes;
- Curtail constitutional limits on taxing goods and services; and
- Require local tax rate cuts without reducing school funding if local sales tax revenue increases?
The proposal has no direct impact on state or local tax revenue. If passed, implementing legislation will have an unknown impact to state and local tax revenue. If implemented, state government entities expect a reduction of $57,000 annually in income tax check-off donations and implementation costs of at least $100,000.”
A “yes” vote supports amending the state constitution to gradually eliminate the state individual income tax, and authorize expansions of sales and use taxes to grow revenue. It would prohibit the income tax from being re-instituted, and requires local tax cuts without reducing school funding when local sales tax revenue increases.
A “no” vote opposes amending the state constitution to gradually eliminate the state individual income tax.
What led to Missouri Amendment 5
Eliminating the income tax has been a priority for Kehoe. He and supporters of Amendment 5 say it will attract businesses and workers to Missouri — something the state has struggled to do in recent years.
Aaron Hedlund, chief economist for domestic policy at the Council of Economic Advisers who lives in Columbia, agrees.
“What that means is that people's wages and salaries are lower in Missouri compared to other states, including neighboring Tennessee, because there's not as many businesses, there are not much activity to hire,” Hedlund told KCUR’s Up To Date.
Tennessee fully eliminated its income tax in 2021, and the state was ranked among the fastest-growing in 2025, according to the Tennessee State Data Center.
Hedlund says eliminating the income tax would put money back in Missourians’ pockets — a message repeated in pro-Amendment 5 advertisements.
But opponents worry that, by raising sales and use taxes, the change could actually end up costing most Missouri taxpayers more. The Missouri Budget Project, a center-left think tank, estimates that 80% of Missourians could experience an overall tax increase under Amendment 5.
“This is a tax shift. It is a tax shift from income tax paid by the wealthiest, and it's going to raise the sales tax and expand the sales tax base,” said Scott Charton, spokesperson for the No On 5 campaign.
Amendment 5 would, in part, end Missouri's constitutional limits on taxing goods and services, and allow an expansion of the tax base or increase of the tax rate without a public vote for five years for the purpose of eliminating the income tax. The amendment would require lawmakers to establish "revenue growth triggers" that would gradually reduce the income tax if met.
Hedlund describes those concerns as a “boogeyman scenario.”
And despite the amendment’s explicit instruction not to decrease education funding, parents and school districts still worry the plan could “devastate” public schools.
The final impact of Amendment 5 is not currently known. An ad in support of Amendment 5 says that the amendment will close a “big tech loophole,” but specific tax changes are not outlined in the amendment.
Certain digital services, which are not currently taxed, have been floated as potential expansions of the tax base. Kehoe has said he would oppose adding taxes to agriculture, healthcare and real estate.
- Aaron Hedlund, chief economist for domestic policy at the Council of Economic Advisers
- Scott Charton, spokesperson for the No on Amendment 5 campaign
