Earlier this month, the Missouri House of Representatives took a bold step forward and passed HJR 173 by a decisive 98-54 vote, sending a proposed constitutional amendment to the Senate that could let voters decide to phase out—and ultimately eliminate—the state income tax. With Governor Mike Kehoe calling this his top priority for the year, and momentum building fast before lawmakers head into key debates, Missouri is closer than ever to joining the ranks of no-income-tax states like Tennessee and Florida.
This vote in the House follows Governor Kehoe’s strong endorsement of this policy in his January State of the State address. This also comes on the heels of other economic wins in Missouri such as becoming the first state with a capital gains exemption and Social Security pension relief. Polling shows over half of Missourians support a full personal income tax exemption.
Currently, Missouri has a nearly flat income tax with the top rate that hovers around 4.7% on income over $9,436. The income tax makes up about 60% of the state’s general operating budget. HJR 173 would expand the sales tax and use tax base to tax more services, digital products, subscriptions, and include a fuel tax adjustment. The bill also allows the State to use new revenue to trigger automatic phase-outs of the income tax rate with a 0.01% reduction per $20 million in extra revenue above the fiscal year 2025 baseline. Full elimination is expected to happen around 2031. As it stands, there will be no immediate tax hike to make up the difference.
Supporters of Missouri’s plan to eliminate the state income tax say it would deliver a strong economic boost by attracting businesses, residents, jobs, and investment—similar to no-income-tax states like Tennessee and Florida. However, critics argue that since the income tax funds about two-thirds of Missouri’s general revenue, replacing it with an expanded sales tax would make the system more regressive, hitting low- and middle-income households hardest.
Analyses suggest Missouri workers could see average wages rise by about $3,000 per year, with a nearly 15% increase in business startups, helping the state outpace its neighbors. The shift would keep more money local by ending taxes on wages, investments, and retirement income, replacing them with consumption-based taxes that let people control what they pay through their spending.
The bill is currently under review in the Senate, with leadership signalling that this bill is a key priority for passage this legislative session. If the Senate approves of this policy, then it will likely be on the ballot in November for voters to decide on bringing the state income tax down to zero. If voters approve, then the legislature will have three years to design a new revenue system that prevents another tax hike before this takes full effect.
Missouri stands at a pivotal moment. Ultimately, this isn’t just about tax policy; it’s about empowering voters to decide whether Missouri should follow the lead of thriving no-income-tax states or maintain the status quo. If the amendment passes, it could reshape the state’s economy for generations.