Missouri Governor Mike Kehoe announced that eliminating the state’s income tax is a top priority for 2026, stating that he wants to eliminate the income tax “so Missourians have more money in their pocket” that they can spend as they see fit.

Kehoe said: “It will be our top legislative priority. We will push very hard with House and Senate leadership to pass a plan to phase out the tax.”

Phasing out the Missouri state income tax will require cutting spending or replacing it with a different tax. Several proposals circulating last year would increase state sales tax to offset the reduction in income tax.

The personal income tax rate for Missouri is 4.7 percent. Based on an average household income of $70,000 that equals $3,290 per family in state income tax.

For 2023, the most recent year available, personal income tax generated $3.36 billion dollars, while sales and use taxes generated 1.6 billion dollars. Fuel taxes generated just shy of one billion dollars.

For perspective 47.6 percent of our state budget comes from Federal cost sharing money that is also paid for by you via Federal income taxes.

The top categories for spending state money are #1 at 30 percent Social Services, #2 at 17 percent K-12 public education, #3 at 9 percent Transportation, #4 at 8 percent Mental Health, #5 at 5 percent Senior Services.

Governor Kehoe could accomplish his goal of eliminating personal income tax and not raise other tax rates by simply rolling back state spending to 2021 levels.

2021 = $35 billion. 2024 = $52 billion.

This would be a win, win and help him to accomplish the goal of stimulating the Missouri economy by letting our citizens keep more of their money.

The alternative of eliminating one tax in exchange for another has no benefit for our citizens or the economy, even though it makes for great campaign ads.

One of the most common reactions to the Governor’s announcement is similar to this: “Eliminate property taxes first.”

The state of Missouri only receives .0054 percent of property taxes. 99 percent of property taxes stay local and go to: #1 - 75 percent to K-12 public schools, #2 County Roads & Bridges, #3 Ambulance District, #4 Fire District. (Estimates based on Dekalb County tax rates). Property taxes are enacted by voters in your county and they fund local services. Any decision to find new funding sources for county services should include county residents, taxpayers and voters.

We have more government today than ever in history. An unintended outcome of Covid was a temporary rise in government spending. Governor Kehoe has the opportunity to make sure that the rise in spending will actually be temporary.

“One thing is clear: The Founding Fathers never intended a nation where citizens would pay nearly half of everything they earn to the government” - Ron Paul