Missouri's Tax Overhaul: Crypto Gains Exempt, But At What Cost?

Hold onto your hats, folks! Missouri lawmakers just dropped a bombshell tax bill that's got everyone talking. They've given the green light to exempt capital gains from state income tax, and it's now sizzling on Gov. Mike Kehoe's desk, waiting for his signature.

This hot-button issue, championed by House Republicans, steamrolled through the House on Wednesday, with every GOP member on board. Meanwhile, 10 Democrats took a step back, opting to vote "present."

Get this: the bill's got some serious retroactive mojo, applying to capital gains from 2025. That's a whopping $430 million hit to state revenue this fiscal year, and a cool $340 million every year after that. Talk about a financial gut punch!

Democrats are sounding the alarm on the budget impact, pointing out that state revenue is already lagging more than 2% behind projections. Yikes!

Now, the bill's not all doom and gloom. It's got some targeted relief, like beefing up the "circuit breaker" property tax credit for low-income seniors and folks with disabilities, and nixing state sales tax on diapers and feminine hygiene products. But Democrats are crying foul, saying the capital gains exemption is a sweet deal for high-income earners. In 2022, a tiny 0.8% of Missouri taxpayers raked in a staggering 65% of the state's reported capital gains. Talk about a lopsided playing field!

Here's where it gets wild: crypto capital gains are also getting a free pass from taxation. This could be a game-changer for digital asset trading and long-term holding in Missouri, but it might just dig the state's revenue hole even deeper, especially if crypto keeps riding the wave of gains.

Corporate Capital Gains: A Delayed Gratification

Hold your horses, corporate bigwigs! Your capital gains party is on hold until at least 2030, when Missouri's top individual tax rate drops to 4.5% under an existing trigger law. That delayed timeline was enough to win over five of the ten Senate Democrats.

Republicans, led by the bill's sponsor, House Speaker Pro Tem Chad Perkins, are standing firm, defending the measure as a way to fire up investment and lighten the tax load. But with the state's finances hanging in the balance, this tax showdown is far from over!