Missouri House debates income tax phase-out plan

JEFFERSON CITY, Mo. (KMIZ)

The Missouri House of Representatives began debate Tuesday on a resolution that would ask voters to phase out the state income tax over several years.

If HJR 173 is passed by voters in November, the state would lower the income tax by 0.01% if net general revenue collections are $20 million more than what was collected at the end of fiscal 2025. The rate would drop another 0.01% for every $20 million collected after that.

State budget numbers show that the state collected $13,430,978,645 by June 30, 2025, the final day of the fiscal year. The collections threshold to reduce income tax further would grow every year by the rate of inflation.

Resolution sponsor Rep. Bishop Davidson (R-Republic) said the Department of Revenue estimated that 0.01% of state income tax amounted to about $20 million, which he hoped would make the reduction "revenue neutral."

The measure would also allow lawmakers to expand the sales tax to apply to other services to make up for revenue lost.