The Point
Jan. 23, 2026
Missouri has taken the first step to become one of the most tax-friendly states in the nation by proposing a ballot initiative to eliminate the state’s individual income tax. If passed, Missouri will join the nine states that have already made this transition and position itself as a magnet for private sector investment and economic growth.
Missouri Governor Mike Kehoe recently announced the ballot question that will ask Missourians if the state should begin phasing out the state income tax over the next five years and replace it with a modernized tax system that better reflects today’s economy. This bold move would help grow the state’s economy and make Missouri more competitive with no-income-tax states like Texas and Florida.
At the center of the proposal is reforming a tax code that has not kept pace with the modern economy. Missouri’s income tax structure dates back to 1931, when incomes were far lower and the economy was vastly different. Today, any Missourian earning just over $9,000 a year is taxed at the top marginal rate, a far too low threshold that’s outdated and impractical for modern times. The tax system has become increasingly out of step with how modern Missourian’s incomes and lives function.
Kehoe’s proposal would broaden the sales tax base to include modern services such as digital subscriptions and online advertising, while exempting agriculture, health care, and real estate. This would make up for the loss in revenue while modernizing the sales tax system.
Pinpoint Policy Institute joined the National Taxpayers Union and a coalition of free-market organizations in signing a letter earlier this year supporting Gov. Kehoe’s plan to phase out the state individual income tax. The coalition highlighted:
“Missouri has the chance to be the next great success story as a state that moved from a Depression-era tax structure to a 21st-century model that rewards work, attracts families and businesses, and provides sustainable revenue for core services.”
Over the past decade, zero-income-tax states experienced average population growth of nearly 12%, compared with less than 5% in the highest-tax states. Additionally, three of the four states with the highest growth are free of state income tax. Phasing out income tax will spur growth, attract workers and businesses, and put more money in the pockets of families across the state while modernizing the outdated tax code.
Pinpoint Policy Institute applauds Governor Kehoe for pushing this initiative forward and urges Missouri lawmakers to support a path to a zero-income-tax policy that prioritizes economic growth and long-term fiscal stability.