What happened?
Missouri is poised to become the first U.S. state to completely eliminate capital gains taxes, pending the governor’s signature. This new legislation targets profits from stocks, real estate, and cryptocurrencies and is set to be retroactive to 2025. The bill also includes expanded exemptions for seniors, disabled residents, and essential goods to gain broader support.
Who does this affect?
This change will primarily benefit individuals and corporations who earn income from capital gains, especially high-income earners. Seniors, people with disabilities, and those purchasing select consumer goods may also see relief due to additional exemptions. Critics argue that it could divert funds from public services and primarily benefit the wealthy.
Why does this matter?
If enacted, Missouri’s move could influence other states in their approach to capital gains taxes, potentially sparking a trend among states vying for investment and financial migration. The policy’s cost is estimated at up to $600 million annually, raising concerns about its impact on state budgets and public services. Broader trends in state tax policies are diverging, with some states increasing taxes on high-value asset sales while others like Missouri opt for exemptions, reflecting national political divides over taxation.