Missouri Tax on Capital Gains 2026 – Missouri has made history by becoming the first state in the nation to fully eliminate state income tax on capital gains for individual filers. For tax year 2026, this means Missouri residents and individuals subject to Missouri income tax pay 0% state tax on both short-term and long-term capital gains from stocks, real estate, cryptocurrency, and other assets.
This landmark change, enacted through House Bill 594 and effective for gains realized on or after January 1, 2025, continues unchanged into 2026. While federal capital gains taxes still apply, Missouri’s deduction creates significant tax savings for investors, retirees, and homeowners across the Show-Me State.
Below is everything you need to know about the Missouri capital gains tax in 2026, including how to claim the deduction, current state income tax brackets, and filing tips.
Missouri Eliminates Capital Gains Tax: What Changed in 2025–2026
In July 2025, Governor Mike Kehoe signed HB 594, making Missouri the only state to completely exempt individual capital gains from state income tax. Individuals can subtract 100% of all capital gains reported on their federal tax return when calculating Missouri adjusted gross income (AGI).
This applies to:
- Short-term capital gains (assets held one year or less)
- Long-term capital gains (assets held more than one year)
- Gains from stocks, bonds, mutual funds, real estate, cryptocurrency, and business assets
The exemption is retroactive to January 1, 2025, and remains fully in effect for the entire 2026 tax year. Missouri is the only state offering this complete elimination for individuals.
Missouri Capital Gains Tax Rate in 2026: 0% for Individuals
Missouri capital gains tax rate for 2026 = 0% for individuals.
Previously, capital gains were taxed at Missouri’s ordinary income tax rates (up to 4.7%). Thanks to the 100% subtraction, qualifying capital gains are now entirely removed from Missouri taxable income.
Note for corporations and pass-through entities: The corporate capital gains subtraction is not yet available in 2026. It triggers only after Missouri’s top individual income tax rate drops to 4.5% or lower. The current top rate remains 4.7%, so C-corporations and certain business entities do not qualify yet.
How to Claim the Missouri Capital Gains Subtraction on Your 2026 Return?
Claiming the deduction is straightforward:
- Report all capital gains on your federal Form 1040/Schedule D as usual.
- On your Missouri Form MO-1040, complete Form MO-A (Itemized Deductions and Income Modifications).
- Subtract 100% of your federally reported capital gains on the appropriate line for the capital gains subtraction (Section 143.121, RSMo).
Capital losses do not qualify for the subtraction—only positive gains reported on your federal return.
File your 2026 Missouri return by April 15, 2027 (or extended deadline). The Missouri Department of Revenue (DOR) provides updated instructions and Form MO-A on dor.mo.gov.
Federal Capital Gains Taxes Still Apply in 2026
Missouri’s exemption does not affect your federal tax liability. You still pay federal capital gains tax based on your filing status and taxable income:
- Long-term capital gains (held >1 year): 0%, 15%, or 20% (plus possible 3.8% Net Investment Income Tax for high earners).
- Short-term capital gains (held ≤1 year): Taxed at ordinary federal income tax rates (up to 37%).
Federal brackets and rates for 2026 reflect post-TCJA adjustments (sunset provisions). Always consult a tax professional or IRS.gov for your exact federal bracket.
Missouri State Income Tax Brackets 2026 (for Non-Capital Gains Income)
Capital gains are fully subtracted, but other income (wages, interest, etc.) is taxed at these graduated rates (indexed for inflation):
| Taxable Income (Missouri AGI after deductions) | Tax Rate |
|---|---|
| $0 – $1,313 | 0% |
| $1,314 – $2,626 | 2.00% |
| $2,627 – $3,939 | 2.50% |
| $3,940 – $5,252 | 3.00% |
| $5,253 – $6,565 | 3.50% |
| $6,566 – $7,878 | 4.00% |
| $7,879 – $9,191 | 4.50% |
| Over $9,191 | 4.70% |
Because the top rate of 4.7% applies to most Missouri taxable income above roughly $9,191, the state functions nearly as a flat-tax state for ordinary income.
Who Benefits Most from Missouri’s 2026 Capital Gains Exemption?
- Investors and retirees with 401(k)s, IRAs, or brokerage accounts realizing gains.
- Homeowners selling primary or investment property.
- Small business owners selling appreciated assets.
- Crypto and stock traders with frequent gains.
- High-net-worth individuals previously paying up to 4.7% state tax on large gains.
The policy is projected to save Missouri taxpayers hundreds of millions annually and positions the state as a magnet for investment and retirement.
Filing Tips and Common Questions for Missouri Residents in 2026
- Use tax software that supports Missouri Form MO-A and the capital gains subtraction (most major platforms have updated for 2025–2026).
- Keep detailed federal Schedule D records—Missouri relies on your federal reporting.
- If you have capital losses, they can still offset federal gains but do not create a Missouri subtraction.
- Non-residents with Missouri-source income (e.g., Missouri real estate sales) may still owe Missouri tax on that portion unless fully exempt under the new rule.
Pro tip: Consult a Missouri-licensed CPA or tax advisor, especially if you have complex investments or multi-state filings.
Future Outlook for Missouri Tax Policy
Lawmakers continue discussing further income tax reductions, including potentially lowering the top rate to 4.5% or below, which would extend the capital gains exemption to corporations. Missouri remains focused on pro-growth tax reforms.
Frequently Asked Questions About Missouri Capital Gains Tax 2026
Does Missouri tax capital gains in 2026?
No—individuals pay 0% state tax due to the 100% subtraction.
Is the exemption only for long-term gains?
No—it covers both short-term and long-term gains.
Do I need to file Form MO-A?
Yes, to claim the subtraction.
Will this change for 2027?
The individual exemption is permanent unless new legislation alters it. Corporate eligibility depends on future rate reductions.
For the most current forms and instructions, visit the official Missouri Department of Revenue website at dor.mo.gov.
Missouri’s elimination of the capital gains tax in 2026 represents one of the most taxpayer-friendly policies in the country. Whether you’re planning investments, selling a home, or preparing your 2026 return, understanding this 0% state rate can help you maximize savings and make smarter financial decisions. Always verify details with the Missouri DOR or a qualified tax professional for your specific situation.