Missouri House Votes to Put Ending the State Income Tax to Voters

The Missouri House voted 98-54 on Thursday, March 12, 2026 to approve a constitutional amendment that would phase out the state's individual income tax and let lawmakers expand the sales tax to a much wider range of goods and services without asking voters each time, according to St. Louis Public Radio. The measure now moves to the Senate and, if approved there, to Missouri voters — a year after the state became the first to fully exempt capital gains from its income tax.

What changed

The resolution, sponsored in the House by Speaker Jon Patterson, would require the legislature to keep cutting the individual income tax rate as state revenue grows, continuing until the rate falls below 1.4%, at which point it would drop to zero. Missouri's current top individual rate is 4.7%. If the tax has not been fully eliminated by January 1, 2032, the phase-out mechanism would keep operating until it is. In exchange, the amendment gives the General Assembly standing authority to extend the state's sales and use tax to transactions involving goods and services that are not taxed today, without a separate ballot measure for each expansion — though it bars taxing any service or transaction that was not already subject to tax as of January 1, 2015, a limit added to blunt criticism that it could reach untouched categories such as health care or legal fees.

Who is affected

A full phase-out would matter most to Missouri's highest earners, who currently pay the top 4.7% rate on a large share of their income, and to retirees and business owners weighing whether to move into or out of the state. It follows House Bill 594, signed in July 2025, which already lets Missouri residents deduct 100% of capital gains reported on their federal return — meaning investment gains are already untaxed at the state level, and this amendment would extend that treatment to wages, business income and everything else. The tradeoff falls more heavily on lower- and middle-income households, who spend a larger share of income on goods and services subject to sales tax and would not benefit as directly from a wage-income tax cut.

The after-tax math

Example: a Missouri couple earning $400,000 in wages and business income currently owes roughly $18,800 in state income tax at the 4.7% top rate. Under the amendment's mechanism, that rate would fall gradually as state revenue grows — for instance, a drop to 3.0% would cut their bill to about $12,000, and full elimination would take it to zero. Offsetting that, if the legislature uses its new authority to extend sales tax to previously untaxed services the family regularly buys, a portion of the savings would flow back out as sales tax on those newly taxed purchases; the size of that offset depends entirely on which services state lawmakers choose to tax later, which the amendment does not specify.

Moves to discuss with a CPA or financial planner

Because the phase-out depends on revenue triggers rather than a fixed calendar, the pace of any rate cuts is uncertain and worth revisiting each year rather than assuming a set schedule. High earners considering a move to Missouri, or business owners weighing where to locate a sale of company stock, may want to discuss with an advisor how the state's existing capital gains exemption already changes the math today, separate from whether this amendment eventually passes. Households that rely heavily on services that could become newly taxable also may want to ask an advisor to model how a broader sales tax base could offset some of an income tax cut.

What to watch

Watch for Senate action on the companion resolutions, the governor's choice of which 2026 statewide election would carry the measure, and any list of specific services lawmakers propose adding to the sales tax base once — and if — the amendment reaches voters.

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