Missouri eliminates capital gains tax for individuals

Missouri is poised to become the first State to eliminate the income tax on capital gains for individuals.  The General Assembly passed House Bill 594 in May, and Governor Mike Kehoe is expected to sign the bill.  If he does so, the tax will be eliminated for all capital gains realized on individual returns in 2025.  While the federal capital gains tax will remain, the legislative change will reduce the overall tax burden on capital gains by up to 4.8%.

The bill does not affect capital gains realized by entities that do not have flow through status in 2025.  However, the bill does provide a trigger that would reduce (or eliminate) the Missouri capital gains tax for entities if State revenues exceed certain limits in future years.

If you have any questions about House Bill 594, please contact Derek Rose.