Missouri Led the Nation by Eliminating Capital Gains Tax in 2025

• March 23, 2026

Missouri Advances Pro-Business Climate with Landmark Tax Reform

Missouri has long prioritized policies that encourage investment, support business growth, and improve the quality of life for its residents. In 2025, the state advanced those goals through a sweeping tax reform package designed to simplify the tax code while reducing the financial burden on individuals and families.

Signed into law by Governor Mike Kehoe, House Bill 594 represents one of the most significant updates to Missouri’s tax structure in decades. A centerpiece of the legislation is the elimination of state taxes on capital gains for individuals, making Missouri the first state in the nation to fully exempt individual capital gains income from state taxation.

Taxpayers can deduct 100 percent of the capital gains reported on their federal returns when calculating Missouri adjusted gross income. It also extends to pass-through entities, a common structure used by many small and mid-sized businesses.

While the policy does not currently apply to C-corporations, the legislation includes revenue benchmarks that could allow similar relief for corporations in future years if state revenues reach certain thresholds.

Together, these reforms reflect Missouri’s commitment to making the state not only a competitive place to do business but also a great place to live. By reducing taxes, encouraging investment, and simplifying the tax system, Missouri continues to build a strong foundation for long-term economic growth and opportunity for businesses and residents alike.