Missouri Moves to Eliminate Capital Gains Tax

Missouri is set to become the first U.S. state to eliminate capital gains tax, following a bill passed on May 7, 2025, and pending approval from Governor Mike Kehoe.

The elimination of Missouri’s capital gains tax is poised to impact cryptocurrency investors significantly, indicating a broader shift in tax policy aligned with economic growth strategies.

Missouri’s recent decision suspends personal capital gains tax, impacting profits from stocks, real estate, and cryptocurrency. Governor Mike Kehoe supports the bill, which is likely to attract investments statewide. Governor Mike Kehoe shared his enthusiasm for the change, stating:

“I am very supportive of the capital gains tax repeal.” – Governor Mike Kehoe, Missouri

If approved, the exemption takes effect immediately.

The bill, passed by Missouri’s Republican-led Legislature, includes broader tax breaks for seniors and exemptions on items like hygiene products. The removal of capital gains tax signals a pro-investment policy shift, influencing individual investors significantly.

For investors, this tax change enhances liquidity by retaining profits from asset sales. At the federal level, however, long-term capital gains remain taxed at varying rates, maintaining some fiscal responsibility.

Economic strategies across states reflect contrasting tax approaches. While Missouri removes taxes, states like Maryland and Washington impose additional capital gains taxes, emphasizing partisan differences on fiscal policies among Republican and Democratic states.

Potential outcomes include increased investor interest in Missouri, particularly within the cryptocurrency industry. Historical data suggest such tax incentives could encourage economic activity, but the reduction in state tax revenue could also impact public services funding.