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Missouri has introduced a significant tax reform starting in the 2025 tax year, allowing individuals to deduct 100% of capital gains from their federal tax return from their state taxable income, effectively eliminating the capital gains tax at the state level.
This change, enacted through House Bill 594, aligns with the federal definition of long-term capital gains and aims to keep more money in the hands of Missouri families.
Key takeaways
- Missouri residents can now deduct 100% of capital gains from their federal tax return, eliminating the state capital gains tax for individual filers.
- The tax reform benefits a wide range of individuals, including homeowners, investors, real estate sellers, and small-business owners, who can now see a significant reduction in their state tax liability.
- The reform is expected to stimulate the housing market in Missouri by providing major tax advantages to real estate investors, house flippers, and businesses, potentially prompting more listings and transactions.
- While federal capital gains taxes still apply, Missouri’s new law offers substantial tax savings for those selling real estate, business equity, or appreciated stock, making the state a favorable location for transactions.
- The tax reform is estimated to cost the state approximately $430 million in the first year and $340 million annually thereafter, potentially affecting state revenue in the long term.
This tax reform presents a unique opportunity for Missouri residents to optimize their financial strategies and consider selling high-gain assets in a more tax-efficient manner. It is advised to consult with a tax adviser before making any selling decisions to fully understand the implications of the new law on individual circumstances.
This summary has been generated with AI tools and edited by Realtor.com News & Insights editors. The full story, written and edited by Realtor.com News & Insights newsroom journalists, is linked at the top of the summary.