Missouri Voters to Decide on Historic Measure to Eliminate State Income Tax

JEFFERSON CITY, Mo. — In a historic move in late April 2026, the Missouri legislature gave final approval to a proposed constitutional amendment that will ask voters to eliminate the state's individual income tax. The measure, which will appear on a statewide ballot later this year, would replace the lost revenue by granting lawmakers broad new authority to expand the state sales tax to a wide range of goods and services. The decision by the Republican-led General Assembly marks the first time since the advent of the modern income tax over a century ago that a U.S. state legislature has put the complete elimination of the tax to a popular vote. If approved, Missouri would join the handful of states, including Florida, Texas, and Tennessee, that do not levy a personal income tax. The proposed amendment directs the legislature to phase out the income tax gradually, with reductions tied to the state's revenue growth. To offset the roughly $5 billion in annual revenue generated by the tax, the proposal would empower lawmakers for a five-year period to impose the state sales tax on “any goods and services” without seeking further voter approval. This provision would override a 2016 constitutional ban that prevents the legislature from expanding the sales tax base. Currently, many services in Missouri, such as haircuts, automotive repairs, legal consultations, and digital streaming subscriptions, are not subject to sales tax. The ballot measure would open the door for all of them to be taxed. However, the official ballot language has drawn criticism for its wording. It asks voters whether they want to phase out the income tax and “modify” the sales tax, a term opponents argue is a euphemism that obscures the potential for significant tax increases on everyday purchases and services. Proponents, including Republican Gov. Mike Kehoe, have championed the proposal as a critical tool for economic development. They argue that eliminating the income tax will make Missouri more competitive in attracting businesses and new residents. At a House committee hearing earlier this year, Will Spartin, a beverage entrepreneur, testified that he located his company headquarters in Florida specifically to avoid a state income tax, despite having attended business college in St. Louis. Supporters point to IRS data analyzed by the Tax Foundation showing that states without an income tax, like Florida and Texas, saw the highest net in-migration of tax filers in 2023, while high-tax states like California and New York saw the largest exodus. “If Missouri's referendum is approved by voters, it could embolden other states to accelerate their own planned income tax reductions,” said Katherine Loughead, director of state tax projects at the Tax Foundation. However, the plan faces stiff opposition from critics who contend it will shift the tax burden from the wealthy to low- and middle-income families. Sarah Narkiewicz, Director of the Low Income Taxpayer Clinic at Washington University, called the proposal a “bad idea” for the average Missourian. Opponents argue that sales taxes are inherently regressive because lower-income households spend a larger percentage of their earnings on goods and services. Traci Gleason of the Missouri Budget Project, a progressive think tank, estimates that two-thirds of Missourians would ultimately pay more in taxes under the new system. Public opinion on the matter appears divided and sensitive to framing. A St. Louis University/YouGov poll from February found that 52% of Missourians prefer sales tax over income tax as a revenue source. However, the same poll revealed strong opposition to applying sales tax to specific services, including car repairs and professional services like accounting. A more recent survey by the Republican consulting firm Torchlight Strategies found that initial opposition to the swap (49% to 37%) grew to 75% after respondents heard arguments against the plan. This kind of fundamental tax-code overhaul presents significant operational challenges for small and mid-sized businesses. While eliminating the state income tax on profits passed through to owners sounds appealing, the shift to a consumption-based system creates a host of new compliance burdens. Businesses, particularly in the service sector, that have never had to collect sales tax would suddenly need to implement systems to track, remit, and report taxes on every transaction. This is not a simple swap; it requires a complete reengineering of accounting and point-of-sale processes, representing a steep and potentially costly learning curve. Our experience shows that such transitions are fraught with risks of non-compliance and audits if not managed carefully from the outset. For businesses trying to understand how this radical tax shift could impact their operations and bottom line, the experts at C&S Finance Group LLC can provide clarity. Visit csfinancegroup.com to learn more about our tax preparation and compliance services. The constitutional amendment is slated to appear on the November 2026 general election ballot, though the governor has the authority to call for an earlier special election. The coming months are expected to feature intense campaigns from both supporters and opponents as they seek to educate and persuade voters on a decision that will fundamentally reshape Missouri's fiscal landscape for decades to come.