Missouri; First State to Fully Exempt Capital Gains Tax…

JEFFERSON CITY, MO - Missouri House Bill 594 (HB 594), recently signed into law by Governor Mike Kehoe, is landmark legislation that eliminates tax on capital gains for individuals and provides a path for corporations in Missouri to do so, as well. This bill makes Missouri the first state in the nation to completely exempt such tax for individual filers.

"The department is already preparing for next year's tax season and we are making the adjustments required to accommodate this and other new laws that affect taxpayers," Director of Revenue Trish Vincent said. "It is always a good thing when we can implement changes that put more money back into the pockets of hardworking Missouri citizens."

The key provisions in HB 594 are outlined below:

• For Individuals: Effective January 1, 2025, individuals can deduct 100% of all capital gains reported for federal income tax purposes when calculating their Missouri adjusted gross income. This applies to both short-term and long-term capital gains from assets such as stocks, real estate, and cryptocurrency.
• For Corporations: Corporations can deduct 100% of capital gains from their federal taxable income when the top individual income tax rate in Missouri falls to 4.5% or lower. The corporate subtraction will take effect in the tax year following the year in which this rate reduction occurs. For 2025, the top individual income tax rate is 4.7%, meaning corporations will not be eligible for the deduction in tax year 2025.

  Tax preparers may want to review client withholdings and adjust them downward if clients are expected to be affected by this new subtraction.

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