By Giulia CarbonaroShareNewsweek is a Trust Project memberMissouri Governor Mike Kehoe, a Republican, said he is preparing a proposal to eliminate the state’s income tax, a change that he described as a “top priority” for 2026.
Why It Matters
Only nine states in the U.S. do not levy income taxes at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
New Hampshire joined the list this year, repealing its interest and dividends tax. Washington does not have a personal or corporate income tax, but the state does tax capital gains income.
Many of these states have benefited from having no income taxes, with Florida and Texas reporting especially high influx of newcomers moving from higher-taxed states. However, cutting one tax often forces governments to increase another—often the sales tax—to make up for lost revenues, experts say.
...What To Know
Kehoe's plan for eliminating the state’s income tax, as announced last month, is ambitious. At the moment, Missouri’s income tax rate is 4.7 percent, according to the Washington-based think tank the Tax Foundation, and generates about $10 billion for the state, according to CPA Practice Advisor, a platform for accounting and tax professionals.
That is roughly the equivalent of 63 percent of Missouri’s general revenue, the company said. Sales and use taxes, on the other hand, currently account for about 24 percent of the state’s revenue, while corporate taxes represent another 6.6 percent.
The governor has not offered any details on how he plans to eliminate the state income tax, but Missouri House Majority Leader Alex Riley said the plan will be phased in over a decade.
The promised reform has its critics: the Missouri Budget Project wrote in October that eliminating the state’s individual income tax would wipe out nearly two-thirds of the state's general revenue budget.
The Institute on Taxation and Economic Policy (ITEP), a left-leaning think tank, said that eliminating a state’s income tax, anywhere, benefits wealthy people over lower-income residents.
What People Are Saying
Missouri Governor Mike Kehoe told reporters last month: “We’ve got a well thought-out plan, and anytime you can let Missourians keep more money in their pocket, it’s always better than the government spending it, any day.”
He also said: “We’re looking at what other revenue streams we can use that make sense, that is not burdensome on Missourians, but ends up putting more money in their pocket by letting them keep their income tax. When we do, it will make sense to everybody.”
Missouri House Majority Leader Alex Riley said in a statement reported by CPA Practice Advisor: “Everything is starting to come together. There’s a lot of energy behind it.”
Michael A. Wolff, a retired judge and chief justice of the Supreme Court of Missouri and a professor emeritus and dean emeritus of the St. Louis University School of Law, wrote for the Missouri Independent: “The brutal, unforgiving fact is that government costs money, and it’s got to come from someone. If you cannot find the man behind the tree…Well, you can’t tax the tree.
“Somebody’s got to pay for public education, roads, bridges, public transportation, public health, health care, mental health, courts, law enforcement, state parks, recreation areas, protection of the natural environment and the National Guard...Bad ideas are bad ideas even when they are phased in. The challenge for our leaders will be to find good and equitable replacements for the income tax, if they exist.”
What Happens Next
Kehoe told the St. Louis Post-Dispatch last month that his plan to eliminate the state’s income tax will be unveiled when lawmakers begin filing new legislation in December, ahead of the start of the legislative session on January 8.
“Missourians will have to decide if they think it is right for them and their families. All we want to do is give people a chance to take a look at that,” he said after a Veterans Day ceremony at the Capitol.
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