Missouri Legislature Passes Tax Bill Ending Capital Gains Tax
JEFFERSON CITY, MO – In a decisive move, the Missouri legislature passed a sweeping tax bill on Wednesday that eliminates the state’s capital gains tax. The House approved the legislation with a vote of 102-41, following earlier Senate endorsement. The bill is now set to be reviewed by Governor Mike Kehoe.
Rep. George Hruza (R-St. Louis County) hailed the legislation as a major benefit for Missouri, asserting that it will attract investment and promote job creation. "It will encourage companies to invest in Missouri and help existing firms grow, ultimately benefiting many Missourians financially," he stated. The bill allows residents to deduct 100% of capital gains reported on federal returns from their state income taxes starting in the 2025 tax year.
The legislation also introduces a provision for corporations to deduct capital gain incomes if the top state income tax rate drops to 4.5% or lower. Critics, including House Democrats, decried the tax cut as favoring the wealthiest Missourians. Rep. Emily Weber (D-Kansas City) argued, "This only helps a select few, while the majority of Missourians do not want this."
According to the state’s fiscal note, the tax elimination is projected to cost Missouri approximately $430 million in the upcoming fiscal year, with annual losses of around $350 million thereafter.
In addition to the capital gains tax relief, the bill features bipartisan-supported measures such as tax credits to assist low-income seniors and individuals with disabilities in affording property taxes. It also eliminates state sales taxes on feminine hygiene products and diapers, addressing concerns raised by constituents regarding these “luxury” taxes.
While some Democrats welcomed these provisions, they expressed frustration over their inclusion in a bill perceived as beneficial primarily to the wealthy. Rep. Raychel Proudie (D-Ferguson) emphasized that meaningful aid for vulnerable communities should have been prioritized independently.
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