Predictions vary on impact of dropping income tax

Impact on Missourians
Amy Blouin, president of the Missouri Budget Project, said median taxpaying units in Missouri making $65,400 a year, would see a $535 net increase in their taxes under a sales tax structure. Blouin noted that only taxpaying units making more than $300,000 would see a decrease in taxes, based on data from the Institute on Taxation and Economic Policy, who support the budget project’s assessment.
LaFaver, who served on the House Budget Committee from 2012 to 2016, said these calculations were based on the assumption that sales taxes would rise to generate current revenue levels, as the Missouri budget must be balanced. LaFaver said this would result in 60% to 80% of Missourians paying more in taxes.
“There are a lot of things out there that people don’t realize that they don’t pay sales tax on right now, that would be added to their new monthly bills,” LaFaver said. “The only thing this bill does is expand the base for sales tax, increase the amount of sales taxes people have to pay and then they would have to trust the legislature to come back later to cut their income taxes.”
These calculations were based on models created by the institute that simulate each Missourian and the taxes they pay. The institute adjusted the model to show what an elimination of income tax would look like, paired with projections on how much the sales tax rate would have to rise to make up for the loss in revenue from individual income tax.
“The governor has not put forward publicly a real plan,” state analyst Eli Byerly-Duke said. “So I assume that the current Missouri sales tax will increase to offset every dollar of individual income tax that was cut.”
Dennis Ganahl, founder of MO Tax Relief Now, said the average taxpayer paid $1,526 per year on state income tax, but under a sales tax structure, they would only pay $65, leaving $1,461 extra dollars in Missourians pockets.
“The heaviest sales tax burden will be paid by people who make above average wage and have more disposable income to spend on goods and professional services,” he said.
Ganahl said Missourians earning less than $20,000 a year pay little to no state income tax. Currently, the highest tax rate in Missouri is 4.7% for taxable income over $9,100.
“Especially for single filers with standard deductions and no major additional income or adjustments, they pay $0,” Ganahl said.
The combined state and local sales tax rate in Missouri was 8.39% in 2025, which was already above the national average of 6.61%.
Blouin said that under a sales tax structure, those standard deductions Ganahl referred to won’t exist, and will increase costs for Missourians.
“With income tax, nobody pays on every dollar of income,” Blouin said.
Currently, the standard deduction for single filers is $15,750 and $31,500 for married filers. This means this income is not subject to tax, which Blouin said will change under this proposed structure.
“If you’re a family making $65,000 a year, you’re spending most of your income on just necessities,” Blouin said. “Every penny you’re spending now is going to be subject to tax; you don’t get a standard deduction anymore.”
Data from the Missouri Budget Project indicates the state is currently in a regressive tax structure, a problem Byerly-Duke said will get worse.
“The state of Missouri already has a regressive state and local tax system,” Byerly-Duke said. “The governor’s proposal is very vague, but as he’s described it, eliminating the personal income tax and then raising sales taxes will make the system much more regressive if the income tax is fully replaced by sales tax.”
According to the budget project, the lowest 20% of earners pay nearly 10% of their income in taxes, whereas the tax burden on those making $1.2 million or more is 5.7%.
Blouin said a potential rise in costs will be more pronounced for older adults and members of the military, because some public pensions and Social Security payments are already exempt from income tax. Active-duty military members and those serving in the National Guard or Reserves are exempt from income tax as well.

Impact on economy
Ganahl said that a sales tax structure will incentivize economic growth, which he said has remained stagnant in Missouri for decades. Missouri’s tax revenue model is almost 100 years old, which legislators on both sides of the aisle agree is an issue.
“We need a tax strategy which attracts residents and businesses alike,” Ganahl said. “Building the population and economy will grow Missouri and produce more tax revenue from more sources.”
Ganahl said many are leaving states with high taxation, such as California, Illinois and New York.
Leah Vukmir, vice president of state affairs for the National Taxpayers Union, said the removal of individual income tax will show that Missouri values its workers.
“When someone works overtime, takes a second job, or finally gets a raise, the state takes a cut first,” Vukmir said in a written testimony. “Eliminating the income tax sends a simple message: Missouri values work and effort, and success won’t be punished.”
Despite support for Patterson’s resolution, Vukmir and the union advocate for educating voters clearly and consistently so that Missourians understand how reform works.
“For most families, tax reform isn’t something you read in a report; you experience it in real life,” Vukmir said. “That’s why voters need clarity, not complexity, and confidence that reforms are designed with their long-term interests in mind.”
However, LaFaver said that this bill will negatively impact Missouri’s economic development and argues these benefits won’t be experienced by the average Missourian earner.
“You raise taxes on those people, you cut funding for services in your state budget, and you restrict consumer spending,” LaFaver said. “That makes it harder for our state to grow economically.”
“You’ll see the math is the math, no matter the messenger,” he added.