What Missouri’s Capital Gains Tax Repeal Means for You

Whether you’re a long-time investor, business owner, or someone thinking about selling a property next year, there’s a big update on the tax front for Missourians. 

In July 2025, Missouri made a historic move: Governor Mike Kehoe signed House Bill 594 into law, effectively eliminating state income tax on individual capital gains beginning January 1, 2025. 

The new law makes Missouri the first state with an income tax to fully exempt capital gains for individuals, and it could mean significant tax savings for investors, retirees, and business owners. 

Let’s break down what’s changing, why it matters, and how it could affect your financial picture.

What Changed?

Starting with tax year 2025, individuals will no longer be required to pay Missouri state income tax on capital gains. That means any gain you report on your federal return, from selling investments, real estate, a business, or other appreciated assets, can be fully deducted when calculating your Missouri taxable income. This applies to long-term and short-term capital gains alike, as long as the individual taxpayer recognizes them. 

In plain terms, recognizing a capital gain means the profit you’ve made from selling an asset is now considered taxable income and must be reported on your federal tax return. Missouri will now allow you to write off the same amount on your state return.

There’s also a trigger mechanism that could eventually apply this benefit to businesses. If Missouri lowers its individual income tax rate to 4.5% or less, the same capital gains deduction will become available to corporate taxpayers. 

Who Benefits Most?

• • Investors and Retirees: Capital gains from real estate, stocks, or business sales will be exempt from Missouri income tax if realized after January 1, 2025.
  • Business Owners: Missouri-based entrepreneurs planning a sale or succession may benefit from improved after-tax outcomes.

What It Means for…

Whether you’re an investor, a retiree, or a business owner, here’s what this change could mean for you:

Individuals + Investors

If you’re planning to sell appreciated securities, property, or other assets, your after-tax proceeds just got a boost, as long as the sale occurs in 2025 or beyond. This may open new doors for:

• • Rebalancing portfolios without added state tax friction
  • Harvesting gains as part of a multi-year tax strategy
  • Planning charitable giving or legacy gifts more efficiently 

Business Owners 

If you’re considering the sale of a business or major ownership change, the tax implications could be significantly different starting next year. Depending on how your business is structured, you may be able to: 

• • Deduct capital gains from a stock or asset sale on your Missouri return 
  • Potentially qualify for additional exemptions in future years if corporate tax triggers are met 

Everyone 

Even if you don’t plan to sell assets immediately, the repeal can impact:

• • Estate Planning and how wealth is transferred
  • Income tax planning for Social Security, RMDs, or rental property
  • Residency decisions for snowbirds or multi-state households

What to Do Next

• • Review upcoming asset sales. If you’re considering selling real estate, a business, or significant investment holdings, now is the time to look at 2024 vs. 2025 trade-offs. 
  • Update your financial plan. This change may affect your income projections, cash flow, and tax withholding.
  • Talk with your Advisor. Everyone’s financial situation is unique. Explore how the repeal fits into your long-term goals.

Bottom Line

This is a rare and potentially game-changing opportunity for Missourians. By eliminating the state tax on capital gains, Missouri has shifted the landscape for wealth planning, retirement income, and business transitions.

If you’re wondering how to make the most of it or how it might impact your next move, we’re here to help you plan confidently, clearly, and strategically.