Missouri voters will decide in August 2026 whether to start repealing the state’s individual income tax. The measure on the ballot, Amendment 5, would not wipe the tax out on election night. It would set up a revenue-triggered phase-out, with the top rate falling in small increments as state general revenue grows, and full elimination targeted for January 1, 2032. It would also give the legislature new authority to expand the sales tax to make up the lost money. The individual income tax currently produces roughly 64 to 66 percent of Missouri’s general revenue, so a repeal is really a restructuring of how the state pays for itself.
What Amendment 5 Would Do
The Missouri Secretary of State certified Amendment 5 for the August 4, 2026 primary ballot. The measure asks voters to amend the constitution to phase out the individual income tax based on revenue growth, reduce personal property and other local taxes when local revenues rise, modify the sales and use tax to offset lost income tax revenue, and protect local funding for public schools.1Missouri Secretary of State. 2026 Ballot Measures
A “yes” vote requires that any future increase in sales tax rates or expansion of the sales tax base be offset by a corresponding reduction in the income tax rate. A “no” vote keeps the current income tax and leaves sales and use tax rates unchanged. The fiscal impact statement notes the direct impact is unknown, because everything depends on the implementing legislation the General Assembly passes afterward.1Missouri Secretary of State. 2026 Ballot Measures
The amendment itself changes no tax rate on the day it passes. It authorizes the legislature to do the work.
How the Phase-Out Would Work
The starting point is Missouri’s general revenue level in fiscal year 2025, adjusted annually for inflation. For every $20 million of revenue above that inflation-adjusted benchmark, the top income tax rate drops by one-hundredth of a percent. The maximum possible reduction in any single year is 1.6 percentage points, which would require revenue to exceed the benchmark by $3.2 billion.
Full elimination is targeted for January 1, 2032, though that date depends on consistent revenue growth. When the rate would otherwise fall below 1.4 percent, the mechanism rounds it to zero rather than leaving a small residual rate in place. Reaching zero requires cumulative revenue growth of roughly $6.6 billion above the FY 2025 baseline. If the economy doesn’t cooperate and the rate hasn’t hit zero by 2032, the triggers continue in later years until the tax is gone.
Where the Current Rate Stands
Missouri’s top individual income tax rate for tax year 2025 is 4.7 percent, down from 5.4 percent a few years ago.2Missouri Department of Revenue. Missouri Individual Income Tax Year Changes Newer legislation proposes moving to a flat 4 percent rate starting in 2026, with further reductions of one-tenth of a percent when net general revenue grows by at least $120 million. If voters approve Amendment 5, its more aggressive $20 million trigger would supersede those smaller step-downs.
How the Lost Revenue Gets Replaced
Individual income taxes generated roughly 64 percent of Missouri’s general revenue in 2025. Every serious repeal proposal points to the same replacement: a broader, higher sales tax.
Missouri’s current state sales tax rate is 4.225 percent, split among general revenue, education, conservation, and parks and soils.3Missouri Department of Revenue. Sales/Use Tax Amendment 5 does not lock in a new rate. It grants the legislature authority to expand the sales tax base to “any goods and services” through future legislation. Which services get taxed, and whether current exemptions for groceries, prescription medications, and similar essentials survive, would fall to future legislative sessions.
Local sales taxes stack on top of the state rate. Combined rates in some Missouri jurisdictions already approach 10 percent. Any increase in the state rate would push combined rates higher, which is why the amendment requires local governments to roll back one or more of their own levies when expanded sales tax revenues raise local collections.
The Constitutional Barrier the Amendment Removes
Missouri voters approved Constitutional Amendment 4 in November 2016, adding Article X, Section 26 to the state constitution. That provision prohibits expanding state or local sales and use taxes to cover any service or transaction that was not already subject to such taxes on January 1, 2015.4FindLaw. Missouri Constitution Art. X, Section 26
That is the exact kind of expansion an income tax repeal requires. Most digital products, streaming subscriptions, and software-as-a-service are currently exempt from Missouri sales tax, and prior legislative attempts to change that have failed because of the Section 26 barrier. Amendment 5 creates a new Section 26.2 that would let the legislature expand sales and use taxes to “any goods and services” for the specific purpose of eliminating the income tax.
The Hancock Suspension
Amendment 5 also suspends the Hancock Amendment’s tax-increase protections for three years. Hancock (Article X, Sections 16 through 24) normally requires voter approval before the state can increase taxes or fees beyond a threshold tied to fiscal year 1981 personal income levels.5Missouri State Auditor. Review of Article X, Sections 16 Through 24, Constitution of Missouri The three-year suspension gives the legislature a window to restructure the tax base without going back to voters for each change. It is one of the most consequential provisions of the measure and one of the least discussed.
What the Repeal Would Not Touch
Amendment 5 is about the individual income tax. A few taxes people might expect to be swept up in a “repeal” are not.
Missouri’s 4 percent corporate income tax, in effect since January 1, 2020,6Missouri Department of Revenue. Corporation Income Tax is not part of Amendment 5. The legislature could choose to phase it out separately, but nothing in the amendment requires that. Pass-through businesses (S corporations, LLCs, partnerships) would benefit directly from individual income tax repeal because their profits flow through to personal returns. Traditional C corporations would keep paying the 4 percent rate.
Kansas City and St. Louis each impose a 1 percent earnings tax on wages earned within city limits, with Kansas City residents owing the tax on income earned outside the city as well. The HJR 173 framework explicitly excludes earnings taxes from the phase-out. Amendment 5 does list the earnings tax rate among the local levies eligible for rollback when expanded sales tax collections raise local revenue, so the 1 percent rate could shrink over time, but it would not disappear. Retirees whose income is entirely Social Security, pensions, and retirement accounts are already exempt from the Kansas City earnings tax.7City of Kansas City. Earnings Tax
What Repeal Would Mean for Your Federal Return
Losing the state income tax also changes your federal return if you itemize. Federal law lets itemizers deduct either state and local income taxes or state and local sales taxes, but not both, and the combined state and local tax deduction is capped.8Internal Revenue Service. Use the Sales Tax Deduction Calculator
For 2026, Congress raised the SALT deduction cap to $40,400 for most filers ($20,200 for married filing separately), up from the previous $10,000 limit. Once Missouri eliminates its income tax, itemizers would switch to deducting sales taxes instead. The IRS offers two methods: optional sales tax tables based on location, income, and family size, or actual sales tax paid over the year. The table method is easier; actual receipts can be more valuable in a year with large purchases like a vehicle or major home improvements.8Internal Revenue Service. Use the Sales Tax Deduction Calculator
If Missouri’s sales tax rate rises to replace income tax revenue, the deduction grows with it, partially offsetting the shift for people who itemize. The roughly two-thirds of taxpayers who take the standard deduction see no federal offset. They pay more in sales tax with no compensating federal benefit.
What You Owe During the Transition
Until the rate reaches zero, Missouri’s existing filing rules stay in effect. Residents report all income regardless of where it was earned. Nonresidents owe Missouri tax only on income earned within the state.9Missouri Department of Revenue. Nonresidents and Residents with Other State Income
The rate that applies to your income is the rate in effect for that tax year. If a revenue trigger produces a reduction, the Department of Revenue adjusts withholding tables for the new calendar year, and you file as usual. Expect some early confusion as employers, payroll companies, and tax software update their systems each time a new rate takes effect.
The Other Proposal on the Horizon
A separate bill, House Bill 2690 (the “Fair Tax Act of 2026”), takes a more aggressive path. Rather than a gradual phase-out, HB 2690 would eliminate all individual and corporate income taxes, franchise taxes, and the estate tax starting January 1, 2028, replacing them with a 5.11 percent tax on all retail sales and services and stripping out most existing exemptions in the process.10Missouri House of Representatives. House Bill 2690 If it advances, it would go to voters in November 2026.
Amendment 5 and HB 2690 point to the same destination through very different mechanisms. The August 2026 vote on Amendment 5 is the one that decides whether Missouri starts down the gradual, revenue-triggered path this decade.