MISSOURI MOVES TO DITCH ITS STATE INCOME TAX
Will Worsham, Esq., Missouri State FAIRtax Leader
In November, Missouri voters will decide whether to amend the state’s Constitution to phase out the state’s individual income tax and permit the extension of the state and local sales taxes to offset any lost revenue from the phase out.
Our Missouri state leader, Will Worsham, Esq., advises us that this effort centers on Missouri House Joint Resolutions 173 and 174. You can read their text here: https://documents.house.mo.gov/billtracking/bills261/hlrbillspdf/6854S.13T.pdf. Will points out that these resolutions do not immediately eliminate the income tax. Instead, they ask voters for permission to restructure Missouri’s tax system.
Will explains how the new system would work. First, like the FAIRtax, it expands the sales tax base, allowing Missouri to tax services as well as goods for the first time. The proposal then creates revenue “triggers”: as sales tax revenue increases, income tax rates are gradually reduced. The target is full elimination of the state income tax.
If revenue benchmarks are met, the state individual income tax phases out completely—potentially by 2031. Will notes these critical points:
👉 The legislature is not directly killing the income tax.
👉 Instead, it is building a constitutional pathway that lets the income tax die over time—if the numbers hold.
Will notes that Governor Mike Kehoe, who took office last year, is solidly behind the measure, having made income tax elimination a central campaign promise. Governor Kehoe had already signed earlier tax cuts, such as HB 594, which allows a full deduction of federal capital gains when calculating Missouri taxable income. The St. Louis accounting firm Anders notes another feature. If Missouri’s individual income tax rate drops to 4.5% or lower, corporations will also be eligible for corresponding capital gains tax relief. You can read HB 594 here: https://documents.house.mo.gov/billtracking/bills251/hlrbillspdf/1683H.01I.pdf.
Will credits Jon Patterson in the Missouri House Leadership and Ben Brown in the Missouri Senate for working with Governor Kehoe to prioritize the income tax phaseout. Brown has previously pushed sales-tax expansion and income-tax replacement concepts. Will notes that the broader legislative strategy is a multi-step campaign. It starts with a gradual reduction of reliance on the income tax by expanding exemptions and cutting rates over time. HB 594 had already removed a major piece of income tax revenue. These measures represent a system swap. As sales tax revenue grows, the individual income tax shrinks – to nothing.
For sure, Missouri is headed in the right direction. But to replicate the FAIRtax in Missouri, HB 594, and HJR 173 and 174 need to entirely eliminate the corporate income tax. As written, HJR 173 and 174 apply only to individual income taxes, and HB 594 applies only to capital gains taxes. These reform measures would also have to provide for a Prebate. A Prebate would have the collateral benefit of overcoming current political opposition to higher and expanded sales taxes.
If your state is looking to eliminate the income tax, I would love to hear from you.
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