Missouri voters are being asked to decide whether the state should begin phasing out its individual income tax and move toward relying more heavily on sales taxes to fund state government.
Supporters call Amendment 5 a bold step that would make Missouri more competitive for businesses and workers. Opponents say it could shift more of the tax burden onto middle- and lower-income families by expanding sales taxes to goods and services that are currently not taxed.
Unlike some ballot measures, Amendment 5 would not make an immediate change. Instead, it would require the Missouri Legislature to gradually reduce and eventually eliminate the individual income tax when state revenue growth reaches certain benchmarks. At the same time, it would authorize lawmakers to broaden the state’s sales and use tax system and loosen constitutional limits on what can be taxed.
The proposal has become a top priority for Gov. Mike Kehoe, who argues that eliminating the state income tax would help Missouri compete with neighboring states for jobs, businesses and investment. Nine states currently do not tax individual income, including nearby Tennessee, Texas and Florida. Supporters say Missouri should join that group to encourage economic growth and attract new employers.
But eliminating one of the state’s largest revenue sources raises an obvious question: How does Missouri replace the money?
The answer is found in the second half of Amendment 5.
Rather than simply cutting taxes, the proposal would allow lawmakers to expand the sales tax base. Today, Missouri’s sales tax applies primarily to retail goods, while many services are exempt. If Amendment 5 passes, future legislatures could choose to extend sales taxes to additional services that currently are not taxed. That could include everything from legal and accounting services to home repairs, personal services, and potentially other professional services if lawmakers decide to include them.
The amendment itself does not place a sales tax on any new product or service. Instead, it gives the Legislature greater authority to do so in the future.
That distinction has become one of the central arguments in the campaign.
Supporters say broadening the sales tax base would modernize Missouri’s tax code because today’s economy is far more service-based than when the current system was created. They argue that reducing income taxes rewards work, encourages investment and makes Missouri more attractive to businesses considering where to locate or expand.
Opponents see it differently. They argue the proposal is less a tax cut than a tax shift. While higher-income taxpayers would generally benefit the most from eliminating the income tax, expanding sales taxes could increase costs for consumers every time they purchase taxable goods or services. Because lower-income households spend a larger share of their income on everyday purchases, critics argue sales taxes tend to fall more heavily on working families.
The proposal has also generated controversy over how it was presented to voters. Opponents challenged the original ballot summary in court, arguing it emphasized the income tax phase-out while minimizing the amendment’s expansion of sales tax authority. An appellate court agreed that portions of the original language were misleading and ordered it rewritten before the measure appeared on the ballot.
If approved, Amendment 5 would not eliminate Missouri’s income tax overnight. Instead, it would begin a gradual process that could reshape how the state pays for schools, transportation, public safety and other services for years to come. The debate ultimately comes down to two competing visions: whether Missouri should rely less on taxing income and more on taxing purchases—or whether that shift would simply move the tax burden from one group of taxpayers to another.
What Could Amendment 5 Mean for You?
If approved, Amendment 5 would gradually phase out Missouri’s individual income tax while giving lawmakers greater authority to expand sales taxes. Here’s how it could affect different Missourians.
Working Families
You could pay less in state income tax over time. But if lawmakers expand sales taxes to additional goods or services, some of those savings could be offset by higher taxes on purchases.
Retirees
Retirees who still pay Missouri income tax could see tax savings. However, expanded sales taxes could increase the cost of some services they use.
Small Businesses
Businesses wouldn’t see immediate changes. But companies that provide currently untaxed services could eventually be required to collect sales tax if lawmakers expand the tax base.
Higher-Income Taxpayers
Those who pay the most in state income taxes today would generally receive the largest tax savings if the income tax is eventually eliminated.
Bottom Line
A yes vote begins the process of eliminating Missouri’s individual income tax while allowing lawmakers to expand sales taxes in the future.
A no vote keeps the current income tax system and existing limits on expanding sales taxes.
Read Part 1: Missouri Voters Face Seven Constitutional Amendments on Aug. 4 Ballot
