As of January 1, 2025, Missouri eliminated its state capital gains tax for individual taxpayers, becoming the first state in the country to fully exempt capital gains from state income tax.
This change, passed under House Bill 594, means Missouri residents no longer pay Missouri income tax (short and long term capital gains) on profits from selling investments such as stocks, mutuals, ETFs held in taxable (after-tax) accounts. This also includes real estate, business, capital assets, and digital assets.
If you’ve been asking “Does Missouri tax capital gains?” or “Are capital gains taxable in Missouri in 2025?”—the answer for individuals is now no.
What Is the Missouri Capital Gains Tax Change?
Beginning with the 2025 tax year, Missouri residents can exclude 100% of capital gains income from their Missouri state taxable income.
This applies to both:
- Short-term capital gains
- Long-term capital gains
As a result, Missouri investors may see a meaningful reduction—or complete elimination—of state taxes owed when selling appreciated assets.
Who Benefits from Missouri’s Capital Gains Tax Elimination?
This law primarily affects individual Missouri taxpayers who earn capital gains from investments held outside of retirement accounts, including:
- Stocks and bonds
- Mutual funds and ETFs
- Real estate sales
- Cryptocurrency and other digital assets
If you hold investments in a standard brokerage account and sell for a profit, Missouri will no longer tax those gains at the state level.
What’s Not Included?
While the Missouri capital gains tax exemption is significant, there are important limitations to understand:
- Retirement accounts (IRAs, 401(k)s, Roth accounts) are not impacted
- Federal capital gains taxes still apply
- Corporate capital gains are tied to future state income tax rate reductions
Because retirement accounts already receive preferential tax treatment, this change mainly impacts after-tax investment strategies.
Why the Missouri Capital Gains Tax Change Matters
Missouri Is First in the Nation
No other state currently offers a full exemption of capital gains income for individuals. This positions Missouri uniquely for investors and retirees evaluating tax-efficient planning opportunities.
Potential Tax Savings
Eliminating Missouri capital gains tax can result in substantial savings—particularly for:
- Large investment sales
- Real estate transactions
- Concentrated stock positions
- Long-term investors rebalancing portfolios
Planning Opportunities
This change opens the door to new conversations around:
- Timing of asset sales
- Portfolio rebalancing strategies
- Charitable giving and gifting
- Estate and legacy planning
While some critics note the benefit skews toward higher-income households, the planning impact can affect many Missouri families over time.
What Missouri Investors Should Keep in Mind
Although Missouri no longer taxes capital gains at the state level, tax planning is still multi-layered. Federal tax rules, income thresholds, future legislation, and long-term financial goals should all be considered before making decisions.
Legislative changes create opportunity—but they rarely replace the need for thoughtful planning.
Missouri Capital Gains Tax: Common Questions & Answers
Q: Does Missouri tax capital gains in 2025?
A: No. Beginning January 1, 2025, Missouri no longer taxes capital gains for individual filers at the state level.
Q: Are both short-term and long-term capital gains exempt in Missouri?
A: Yes. Missouri exempts both short-term and long-term capital gains for individuals.
Q: Does this apply to real estate sales in Missouri?
A: Yes. Capital gains from real estate sales held in taxable accounts are no longer subject to Missouri income tax.
Q: Are retirement accounts affected by the Missouri capital gains tax change?
A: No. IRAs, 401(k)s, and other retirement accounts are not impacted by this change.
Q: Do I still owe federal capital gains tax?
A: Yes. This change applies only to Missouri state taxes. Federal capital gains taxes still apply.
Q: Does this apply to corporations?
A: Corporate capital gains deductions are tied to future Missouri income tax rate reductions and are not yet fully in effect.
Final Thought
If you’re a Missouri resident and expect to realize capital gains in the coming years, now is a good time to review how this change could impact your broader financial strategy. A thoughtful conversation—before any decisions are made—can help ensure this opportunity is aligned with your long-term goals.
-Michael