Missouri lawmakers have passed a significant tax bill exempting individual capital gains—including those from cryptocurrency and stock investments—from state income tax, now awaiting Governor Mike Kehoe's signature. The measure, a Republican priority, would apply retroactively to gains realized in 2025 and is expected to reduce state revenue by $430 million this fiscal year and $340 million annually thereafter. Democratic legislators voiced concerns about the budget impact, highlighting that state revenues are already below projections and arguing the policy disproportionately benefits high-income earners, as 0.8% of taxpayers claimed 65% of capital gains in 2022.
The bill includes additional provisions, such as expanding property tax credits for low-income seniors and disabled residents and exempting state sales tax on diapers and feminine hygiene products. However, corporate capital gains remain taxable until at least 2030. Supporters argue the exemption will spur investment and promote digital asset trading and long-term holding within Missouri, potentially increasing crypto market activity, while critics warn of deepening fiscal pressures.