Gov. Mike Kehoe’s Missouri Income Tax Repeal Advances via House Joint Resolutions 173 and 174

(MISSOURI) — Missouri House lawmakers on March 30, 2026 approved a plan to repeal the state individual income tax, advancing House Joint Resolutions 173 and 174 and setting up a ballot fight that could affect workers, business owners, and new Missouri residents, including immigrants and visa holders who pay state tax on wages.

The measure, sponsored by Rep. Bishop Davidson, would move Missouri toward a phased elimination of the income tax, potentially by 2032. Supporters say the change would make Missouri more competitive. Opponents warn it would shift the cost to consumers through higher sales taxes.

For taxpayers, the immediate point is simple: nothing changes yet for tax year 2026. Missouri residents still must follow current filing rules for 2026 returns filed in 2027 unless the proposal clears the full legal process.

What the House passed

The House action centers on House Joint Resolutions 173 and 174, which would amend the Missouri Constitution. That matters because a constitutional change needs more than a simple bill. It must pass the General Assembly and then win voter approval.

The proposal had earlier momentum on January 28, 2026, when the House Commerce Committee heard HJR 174. The same day, the Missouri GOP Executive Council backed the plan.

If the resolutions keep moving, voters could see the measure on the November 2026 ballot.

Gov. Mike Kehoe’s tax plan

Gov. Mike Kehoe made income tax repeal a major goal in his January 13, 2026 State of the State address. His proposal uses a revenue trigger rather than an immediate repeal.

Under that framework, for every $20 million collected above the fiscal year 2025 baseline, Missouri’s top individual income tax rate of 4.7% would drop by 0.01 percentage point. The governor described that as a five-year phaseout structure tied to revenue growth.

That approach is separate from federal income tax rules. Missouri taxpayers, including green card holders and H-1B workers who live in the state, would still owe federal income tax under IRS rules even if Missouri eventually repeals its own tax.

For federal residency rules, immigrants should review Publication 519 and the IRS international tax page.

How Missouri would replace the revenue

The central tax issue is not just repeal. It is replacement.

Backers of the plan say Missouri could offset as much as $9 billion in lost general revenue by expanding sales taxes. That follows another recent state tax move. Missouri already ended its state capital gains tax through HB 594, which Gov. Kehoe signed on July 11, 2025.

Critics say a sales-tax-funded system would hit moderate-income households harder than top earners. An analysis from the Institute on Taxation and Economic Policy estimated:

• The middle 20% of households, earning about $49,000 to $78,000, could pay about $535 more per year
• The lower-middle group, earning about $24,000 to $49,000, could pay about $850 more per year
• The top 1% could see an annual gain of about $40,000

That distribution matters for immigrant families and new arrivals. Sales taxes apply regardless of immigration status. A worker with a lower wage may see less benefit from income tax repeal than a high-income household.

Why this matters for immigrants and visa holders

For many immigrants, state tax bills are one part of a larger filing picture. Missouri may change its tax system, but federal reporting remains in place.

Federal filings that would still apply

F-1 and J-1 holders often have different federal residency treatment during their exempt years. H-1B and L-1 workers usually become resident aliens once they meet standard tests. Those rules are federal and do not depend on Missouri’s ballot measure.

Taxpayers looking for federal forms should use IRS forms and publications.

Supporters and critics clash over the economic case

Supporters argue that ending the income tax would attract workers and businesses. They point to a January 28, 2026 Council of Economic Advisers report that they say found a 16% to 19% increase in startups and an average $4,000 wage gain in states that phased out income taxes.

Opponents dispute the tradeoff. They argue the loss of up to $9 billion would force broader sales taxes and squeeze ordinary households.

The House vote also drew broader political attention. The Kansas City Business Journal tied the Missouri income tax repeal vote to a call for a general strike amid wider labor unrest in late March 2026. Public reports did not give firm details on organizers or a schedule.

What to watch next

The next steps are procedural and political:

For now, Missouri residents should prepare for 2026 state and federal filings under current law. Immigrants should also confirm whether they are resident or nonresident aliens for federal purposes, especially after a status change. IRS Publication 519, Publication 17, and Publication 901 remain the main federal references.

If Missouri puts the measure on the ballot, taxpayers should watch for the final text, any sales tax expansion details, and the first tax year the repeal would actually affect.