Income Taxes

Following a rocky end to last year’s legislative session, Democrats are looking to slow things down, while Republicans push to pass Gov. Mike Kehoe’s state income tax cuts. Political reporter Jason Hancock spoke with KCUR’s Up To Date about the slow start and early dysfunction in the Missouri General Assembly.

If passed by voters, a proposed constitutional amendment would allow Missouri's legislature to expand state and local sales and use taxes, while eliminating the state income tax. The AARP and Democratic lawmakers said that would shift more of the cost on seniors and low-income residents.

House Majority Leader Alex Riley will likely become Missouri’s speaker of the House after next year’s elections. But before then, he's responsible for shepherding Republican priorities like eliminating the state income tax.

Under the proposed constitutional amendment sponsored by House Speaker Jon Patterson, sales tax could be imposed “on transactions involving any goods and services." But Patterson said that will be amended to prevent more taxes on fill-ups.

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.

The fund held $5.8 billion, a record, at the end of June 2023. Without changes to the budget, State Auditor Scott Fitzpatrick warns, the money will all be gone by June 2028.

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's capital gains tax cut will apply to all gains since Jan. 1, and will be reflected in the income tax returns due in April. It's the first state to exempt profits from the sale of assets such as stocks, real estate, and cryptocurrency from income taxes.