INTEL · August 04, 2025

Could the repeal of state capital gains taxes affect you?

First Citizens Wealth INTEL: Insights and News—Taxation, Election & Legislation

Each month, we'll cover time-sensitive updates on tax, election and legislation developments that could affect you.

In July, the Missouri governor signed into law an unprecedented bill that eliminates the state's individual capital gains taxes. Missouri is now the first US state to repeal its state capital gains tax. This bill may be a watershed moment because other states may consider similar legislation if the bill is successful for Missouri.

Who is impacted

The Missouri bill affects two broad groups: individual taxpayers and corporations. Now that the bill has passed, Missouri residents will stop paying state capital gains taxes on the sales of stocks, bonds, real estate and other investment options starting in the 2025 tax year.

If the state achieves certain revenue thresholds, Missouri corporations will also receive capital gains tax reductions and possibly exceptions on non-investment related sales—although these provisions wouldn't be activated until 2029 at the earliest.

There are also sales tax exemptions in the law designed to reach state residents who may not be active investors or business leaders. The law includes exemptions for items like diapers and feminine hygiene products, as well as tax deductions tailored to seniors and individuals with disabilities.

The law's supporters consider these tax reductions a way to entice businesses, investors and entrepreneurs to consider Missouri as a business-friendly choice along with income tax-free states like Florida and Texas.

What action is required and when

The Missouri bill was signed into law July 10, 2025. Success factors for the legislation will be measured on two fronts: state revenues and economic growth. It's estimated that Missouri will initially see a several-hundred-million-dollar drop in revenues. Between individual and corporate capital gains exemptions, the impact of the law won't be accurately measurable until 2030 or beyond.

No action is needed to determine if your state may adopt similar legislation at this time.

Who you should talk to now

The impact of this law on Missouri's economy will help determine if more states will consider similar capital gains legislation. To stay up to date with the latest tax laws in your state, speak with your CPA or tax advisor. If you'd like to learn more about Missouri's capital gains legislation, refer to Senate Bill Number 46. To better understand how to integrate a pragmatic tax strategy with your long-term financial goals, talk to your First Citizens Wealth consultant today.

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