In a first-of-its-kind move, Missouri has eliminated state income tax on all capital gains for individual taxpayers, effective January 1, 2025. This new law, signed by Governor Mike Kehoe, makes Missouri the only state with an income tax that fully exempts capital gains.
Here’s what it means for real estate:
- No more state tax on profits from selling real estate. Whether you’re selling an investment property, vacation home, or long-held residence, you’ll no longer owe Missouri income tax on your gains.
- Applies to pass-through entities. Gains from LLCs or S corporations flow through to the individual and qualify for the exemption.
- May boost real estate activity. More investors and homeowners may decide to sell, now that tax savings increase their net proceeds.
- Reduces reliance on tax deferral tools. Strategies like 1031 exchanges are still helpful federally, but less necessary at the state level.
- Only applies to Missouri taxpayers. Out-of-state property sales are still subject to the tax laws of those states.
- Trusts and estates benefit, too. Missouri-based trusts can now pass on gains without triggering state tax.
While federal capital gains taxes still apply, Missouri’s new policy is a major win for real estate sellers and investors. If you’ve been thinking about listing or cashing out on a property, 2025 might be the perfect time to make your move.
