How Much Is Capital Gains Tax in Missouri?

Capital gains, profits from selling assets like stocks, real estate, or other property, are subject to federal taxation. State tax laws vary significantly regarding these gains.

Missouri’s Taxation of Capital Gains

Effective for tax years beginning on or after January 1, 2025, Missouri individuals will no longer pay state income tax on capital gains. This change stems from House Bill 594, signed into law on July 10, 2025, which allows a 100% deduction of all capital gains reported for federal income tax purposes when calculating a taxpayer’s Missouri adjusted gross income.

This deduction applies to both short-term and long-term capital gains, encompassing profits from the sale of various assets, including stocks, real estate, and cryptocurrency. Prior to this legislative update, Missouri treated capital gains as ordinary income. While Missouri has eliminated its state-level capital gains tax for individuals, federal capital gains taxes continue to apply.

Missouri State Income Tax Brackets

For income other than individual capital gains, Missouri operates a graduated income tax system, where different portions of taxable income are taxed at increasing rates. For the 2024 tax year, the state’s income tax rates range from 0% to a top rate of 4.8%. These tax brackets apply uniformly across all filing statuses, whether an individual files as single, married filing jointly, or head of household.

For the 2025 tax year, the top individual tax rate is 4.7%. These brackets define the tax liability for most types of income in Missouri, but they no longer apply to individual capital gains due to the 100% deduction that began in 2025.

Missouri Capital Gains Specific Provisions

While the 100% deduction for individual capital gains began in 2025, Missouri continues to offer specific provisions for certain types of gains. One such provision is the Qualified Small Business Stock (QSBS) exclusion. Prior to the general capital gains exemption, Missouri allowed a 100% exclusion for capital gains from the sale of qualifying small business stock held for at least five years, provided federal Section 1202 criteria are met.

Another significant incentive is the Missouri Beginning Farmer Tax Deduction, which aims to encourage the transfer of farmland to new farmers. This deduction, effective since August 28, 2023, provides tax benefits to farm owners who sell or lease land to eligible beginning farmers. For sales of farmland, the first $2 million of capital gains included in federal adjusted gross income is 100% deductible. A tiered system applies to amounts exceeding $2 million, with subsequent $1 million increments being 80%, 60%, 40%, and 20% deductible, respectively.

If a farm owner enters into a rental, lease, or crop-sharing agreement with a beginning farmer, they can deduct up to $25,000 of the income received from that agreement per tax year. To qualify for these benefits, both the farm owner and the beginning farmer must obtain a certification from the Missouri Agricultural and Small Business Development Authority (MASBDA). These specific provisions for farmland sales and QSBS highlight Missouri’s tailored tax incentives, even with the new 2025 law covering all individual capital gains.