Missouri Voters to Decide: Sales Tax or Income Tax?
A portrait of George Washington is displayed on a stack of U.S. one-dollar bills in Dallas, Tuesday, April 7, 2026. (AP Photo/LM Otero)
Missouri voters are being asked to weigh a rare and consequential proposal: whether to eliminate the state’s individual income tax. If the measure appears on the ballot later this year, it would mark the first time in more than a century that a state legislature has put such a question directly to voters. A “yes” vote would also allow an expansion of the state’s sales tax.
The idea of taxing income at the federal level dates back to 1913, when the 16th Amendment was ratified. Missouri adopted its own income tax a few years later, in 1917, following a broader trend among states.
Not all states followed that path. Florida, Nevada, South Dakota, Texas, and Wyoming have never had a state income tax, instead relying on other revenue sources such as sales taxes or natural resource taxes. New Hampshire and Tennessee previously taxed certain forms of income like interest and dividends but have eliminated those taxes in recent years.
Alaska stands alone as the only state to adopt and later repeal a broad individual income tax, doing so in 1980 when oil revenues were strong enough to offset the loss.
Some states have taken gradual steps toward reducing income taxes. Kentucky passed a law in 2022 that lowers its rate over time based on revenue targets. Mississippi approved a plan to cut its rate from 4 percent to 3 percent by 2030, with the possibility of further reductions. Oklahoma has also tied future income tax cuts to revenue growth, aiming for a long-term phaseout.
Missouri’s proposal would follow a similar path but goes further by embedding the plan into the state constitution. It would require lawmakers to phase out the income tax gradually as revenues increase. To make up for the lost revenue, the plan would give the legislature authority to expand the sales tax to cover a broader range of goods and services. This would bypass a 2016 voter-approved constitutional restriction that currently limits such expansions. Lawmakers would have five years to determine which additional items to tax, without needing further voter approval.
One point of concern is how the proposal is described on the ballot. It asks voters whether to phase out the income tax and “modify” the sales tax, without explicitly stating that sales taxes could increase or expand.
Analysts say the shift could have uneven effects. According to estimates from the Institute on Taxation and Economic Policy, a family earning between 49,000 dollars and 78,000 dollars per year could pay about 535 dollars more annually under the new system. Lower-income households could see even larger increases relative to their income.
At the same time, some research suggests that tax policy can influence where people choose to live. States without income taxes, including Texas, Florida, and Tennessee, have seen strong population inflows in recent years, while higher-tax states like California, New York, and New Jersey have experienced slower growth or population declines, based on IRS migration data analyzed by the Tax Foundation.
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