income tax cuts

In his 2026 State of the State address, Gov. Mike Kehoe said he wants a statewide vote in November on his plan to phase out the state income tax and allow for taxes on things like monthly subscriptions and digital services. Democrats have questioned whether that's possible without wrecking future budgets.

Missouri Senate Democrats say they're still irate over how the GOP cut off debate last year — pushing through legislation to redraw congressional maps, ban abortion and repeal paid sick leave.

Missouri lawmakers arrive in Jefferson City on Wednesday for the start of the 2026 legislative session, which runs until mid-May. Gov. Mike Kehoe is pushing to eliminate the state income tax, but a smaller budget will likely force spending cuts.

Missouri Republicans made big moves last legislative session to force through their agenda on abortion, redistricting and more — and now the consequences will be felt this year. Democrats are determined to stall action in the state Senate as retribution.

What will Missouri lawmakers focus on in the 2026 legislation session? Pre-filed bills show that lawmakers are looking to phase out the income tax, reduce some property taxes, and invest in the state’s roads and schools — although the budget surplus is quickly disappearing due to previous tax cuts.

When Missouri lawmakers voted on the bill, the tax cut was estimated to reduce revenue by about $111 million annually. Now the state budget director says the loss could be as much as $500 million the first year and $360 million annual annually.

This year, Missouri became the first state in the country to tax income, but not capital gains. That could present a challenge as the state prepares to face a budget shortfall.

Missouri lawmakers are still wrestling with abortion rights, paid sick leave, tax cuts and the state budget. What's ahead for the General Assembly in the last two weeks of this legislative session?

The Republican-led legislature is considering changing or repealing some voter-approved measures, including abortion legalization and the minimum wage hike. Lawmakers also need to pass a budget, which may look much smaller than previous years.

One bill would set the state income tax to a flat rate of 4.7%, with the ability to reduce it to 3.7% over the next decade, and would also reduce the corporate income tax rate.

Kehoe highlighted a number of new budget items that seek to reduce the state’s crime rate, including a new state crime lab and more money for local departments. He also reiterated his support for a state board overseeing St. Louis Police, taking away local control from the city.

Kehoe said one of his priorities for cutting taxes this year is to exempt capital gains — the profits from sale of investments like a business or stocks. But doing that would reduce Missouri's revenue by about $300 million annually.