Voters will decide on a legislatively referred amendment on August 4, 2026, that proposes a major restructuring of the state’s tax system. [1, 2]
- Income Tax Elimination: It calls for a gradual, revenue-growth-based elimination of the state’s individual income tax. [1]
- Sales Tax Expansion: It authorizes the legislature to expand sales and use taxes to services and goods not currently taxed to offset revenue loss.
- Local Tax Changes: The amendment requires local governments to reduce property or other taxes if sales tax revenues spike, while forbidding reductions in school funding.
Key Arguments:
- Supporters, including proponents like Americans for Tax Reform and Gov. Mike Kehoe, claim it will boost economic prosperity and competitiveness.
- Opponents, such as the Missouri Budget Project, argue it would create a large budget deficit and disproportionately increase costs for lower-income families.
As it stands right now, the citizens of Missouri get to vote whether or not new State Taxes are implimented. According to discussions I’ve read, this will no longer be the case if Amendement 5 is approved. Then again, there is a lot of talk about there that this will allow the Missouri legistlature to put taxes on services that are currently not taxed, like doctor’s visits. That the cost to the average Missouri citizen will rise significantly, costing Missouri tax payers more in the long run than it does under the current rules. But there is a line in the bill that states that taxes cannot be affected on services or items of which which were not taxed prior to 2015. Unfortunately, social media is filled with lies and misleading statements and unless a person does their homework, they can be mislead into voting for something that will harm them in the long run.
I believe that the resolution to Missouri’s revenue woes should be focused on cutting the fat in government. What do we need, what do we NOt need. Trim the fat, then come to us about how to raise more revenue if the need still exists.
I am now retired. I am living on Social Security benefits and my wife’s income. My Social Security is not taxable in Missouri at the present time, I would like for it to stay that way. My medicare benefits are not taxable at this time, I would like it to stay that way. I do not need Missouri to become too expensive for me to live here. So, I’m leanming to say NO. Let’s leave things the way they are until someone can come up with a better, more clear cut, better defined bill to present to the Missouri citizens showing how eliminating State Income Tax and raising sales taxes would benefit all Missourians, not just the wealthy who can avoid these tax increases. But currently, I’m undecided. I need clarification.
This amendment would require the legislature to reduce the state individual income tax based on revenue growth until the tax is eliminated, and would prohibit future state income taxes once it is eliminated. It would also require reductions in personal property and other local taxes to offset revenue from any expansion of sales and use taxes, while prohibiting reductions in funding for public schools. It would allow the legislature to expand sales and use taxes if the changes are used to reduce and eliminate the income tax, but would prohibit applying those taxes to services or transactions that were not taxed as of January 1, 2015.
Currently, Missouri has a graduated income tax with rates ranging from 2%-4.7%. The state sales tax is 4.225%. However, local sales taxes, including county and city taxes, mean that combined sales taxes are higher. According to the Tax Foundation, Missouri has an average combined state and local sales tax rate of 8.41%.
The ballot measure would amend Section 4(d) and Section 26 to Article X of the Missouri Constitution. The following italic text would be added and struck-through text would be deleted:[
Section 4(d).
1. In enacting any law imposing a tax on or measured by income, the general assembly may define income by reference to provisions of the laws of the United States as they may be or become effective at any time or from time to time, whether retrospective or prospective in their operation. The general assembly shall in any such law set the rate or rates of such tax. The general assembly may in so defining income make exceptions, additions, or modifications to any provisions of the laws of the United States so referred to and for retrospective exceptions or modifications to those provisions which are retrospective.
2. Notwithstanding any provision of this constitution to the contrary, the general assembly shall enact legislation to reduce and eliminate the state individual income tax by requiring reductions to the top rate of the individual income tax based on revenue growth until such tax is eliminated. Upon the elimination of the individual income tax, the general assembly shall be prohibited from enacting or imposing any state individual income tax.
Section 26.
1. In order to prohibit an increase in the tax burden on the citizens of Missouri, state and local sales and use taxes (or any similar transaction-based tax) shall not be expanded to impose taxes on any service or transaction that was not subject to sales, use or similar transaction-based tax on January 1, 2015.
2. (1) Notwithstanding any provision of this constitution to the contrary, including subsection 1 of this section, for the purpose of reducing and eliminating the state individual income tax and reducing local tax rates, state and local sales and use taxes (or any similar transaction-based tax) may be expanded by legislation to impose taxes on transactions involving any goods and services. For the purposes of this section, the phrase “for the purpose of reducing and eliminating the state individual income tax and reducing local tax rates”, with respect to legislation enacted by the general assembly, means that the legislation expressly states the general assembly’s finding that such legislation will directly lead to the reduction and elimination of the state individual income tax as provided in subdivision (2) of this subsection, and will directly or indirectly lead to the reduction of local tax rates as provided in subsection 3 of this section.
(2) Any expansion of the sales and use tax base or increase in the state sales and use tax rate enacted for the purpose of reducing and eliminating the state individual income tax and reducing local tax rates shall be offset in the same legislation by a reduction in the top rate of individual income tax that reduces such tax revenues, less refunds, by an amount that is at least substantially equal to revenues generated by such expansion of the sales and use tax base or increase in the state sales and use tax rate, and, if such legislation is enacted within five years of the effective date of this amendment, shall not be considered new annual revenue for the purposes of Section 18 (e) of this Article and shall be exempt from the provisions of Article IV, Sections 30(b), 30(c), and 30(d) of this Constitution.
3. (1) Notwithstanding any provision of this constitution to the contrary, beginning twelve months from the effective date for legislation in which the general assembly expands the sales and use tax base pursuant to subsection 2 of this section, any political subdivision that imposes a sales or use tax shall, in the manner provided by law enacted by the general assembly, make a one-time adjustment to one or more of the following rates of tax imposed by the political subdivision to reduce the amount of revenue generated thereby in an amount that is substantially equal to ninety-seven percent of the additional revenue produced by any expansion of the sales and use tax base authorized by this section:
(a) The sales and use tax rate; (b) The levy imposed on property in class 2; (c) The levy imposed on property in subclass (1) of class 1; (d) The levy imposed on all class 1 property if such political subdivision imposes a single rate of levy on all such property; or (e) The rate of any tax imposed on earnings.
(2) Notwithstanding the provisions of subdivision (1) of this subsection to the contrary, no political subdivision shall adjust its local tax rates in a manner that results in any reduction in funding to any public schools within, or serving, such political subdivision.
4. Notwithstanding any provision of this constitution to the contrary, beginning twelve months from the effective date for legislation in which the general assembly expands the sales and use tax base pursuant to subsection 2 of this section, each sales and use tax rate imposed directly by this constitution, with the exception of the rate imposed under Article XIV of this Constitution, shall, in the manner provided by law enacted by the general assembly, be adjusted in order to reduce the amount of tax in an amount substantially equal to the amount of tax produced by any sales and use tax base expansion authorized by this section. The state auditor shall be responsible for calculating the reduced rates that will go into effect as provided in this subsection.
A “yes” vote supports amending the state constitution to:
- reduce the state individual income tax, based on revenue growth, until the tax is eliminated;
- reduce personal property and other local taxes when local revenues increase, while prohibiting reductions in funding for public schools;
- prohibit future state individual income taxes once eliminated; and
- limit expansions of sales and use taxes, unless they are used to reduce income tax.
A “no” vote opposes amending the state constitution to:
- reduce the state individual income tax, based on revenue growth, until the tax is eliminated;
- reduce personal property and other local taxes when local revenues increase, while prohibiting reductions in funding for public schools;
- prohibit future state individual income taxes once eliminated; and
- limit expansions of sales and use taxes, unless they are used to reduce income tax.
What are the arguments for and against this amendment?
Gov. Mike Kehoe (R) supports the amendment. He said, “This is the first step in keeping our promise to make Missouri more competitive, attract jobs and investment, and let families keep more of what they earn from the start.” State Rep. Bishop Davidson (R-130), who sponsored the amendment, said, “[The income tax] has killed the source of wealth for Missouri’s middle class. It has made the American Dream an American memory and even that is fading out of view. It has decayed our economy, stagnated our wages, chased young people out of the state and left our seniors without their families.”
State Rep. Ashley Aune (D-14), speaking in opposition to the amendment, said, “Where are we going to get that revenue? We’re going to get that revenue off the backs of Missourians who are living paycheck to paycheck, seniors who already can’t afford their medications or to stay in their homes.” Claire Cook-Callen, the executive director of Progress Missouri, an organization also opposing the amendment, said, “Missourians expect strong public schools, reliable roads and bridges, and fully-funded, accessible services — and for everyone to pay their fair share. Instead, this plan gives a tax break to the state’s eight billionaires and sticks each working family with a bill of about $500 more each year.”
Sales and use tax expansion to reduce income tax
The amendment would allow the state legislature to expand sales and use taxes if the changes are used to reduce and eliminate the income tax, but would prohibit applying those taxes to services or transactions that were not taxed as of January 1, 2015.
Any expansion or rate increase would be required to be offset in the same legislation by a reduction in the top individual income tax rate that decreases income tax revenue, net of refunds, by an amount at least substantially equal to the revenue generated.If enacted within five years of the amendment’s effective date, such revenue would not count as new annual revenue for purposes of constitutional revenue limits and would be exempt from certain appropriations limits.
Adjustment to State and Local Taxes
The amendment would require tax reductions following any expansion of the sales and use tax base authorized under its provisions.
Beginning 12 months after such legislation takes effect:
- Political subdivisions would be required to make a one-time adjustment reducing revenue by an amount substantially equal to 97% of the additional revenue generated from the expanded tax base. These reductions could be made through changes to sales taxes, property tax levies, or local earnings taxes.
- Local tax adjustments could not reduce funding for public schools.
- Sales and use tax rates imposed directly by the constitution (except under Article XIV) would be reduced by an amount substantially equal to the revenue generated from the expansion, with the state auditor responsible for calculating the adjusted rates.
