Missouri Income Tax Replacement Plan Survives Legal Challenge for August Ballot
A judge ruled Missouri’s plan to eliminate income taxes and raise sales taxes will appear on the August ballot despite legal challenges, setting up an expensive campaign battle.
JEFFERSON CITY, MISSOURI — A Cole County judge ruled Monday that Missouri voters will decide in August whether to replace the state’s individual income tax with expanded sales taxes, rejecting legal challenges that sought to block the measure from appearing on the ballot.
Circuit Judge Christopher Limbaugh denied claims from opponents that lawmakers violated constitutional limits when crafting Amendment 5, which represents Governor Mike Kehoe’s top legislative priority. The measure will appear on the August 4 primary ballot with the description written by state legislators.
An appeal was filed Monday evening, setting up a potential higher court review before the election.
Campaign Funding Already Exceeds $2 Million
Amendment 5 has emerged as one of the most expensive ballot campaigns this summer, with nearly $2 million already donated to promote the measure through a nonprofit organization called Missouri Promise. Opposition has organized on two fronts: Missourians for Fair Taxation, led by the Missouri Association of Realtors to coordinate business opposition, and No Everything Tax, which is organizing resistance from progressive groups.
The proposal would direct lawmakers to establish revenue triggers for reducing the top state income tax rate, currently set at 4.7% for taxable incomes greater than approximately $9,200. Legislative leaders would have five years to modify what transactions are subject to sales tax or increase the current rate to generate sufficient revenue for eliminating the income tax.
Sales Tax Could Rise Dramatically
The amendment does not specify the revenue triggers that would guide the transition. If lawmakers choose not to expand sales tax coverage to additional transactions, the current 3% state sales tax rate would need to increase to as much as 11.5% to replace income tax revenue, according to legislative analysis.
Kehoe first outlined the income tax elimination plan during his January 13 State of the State address, positioning it as a cornerstone initiative for his administration. The governor has argued that removing the income tax would make Missouri more competitive with neighboring states and attract new businesses and residents.
The legal challenge centered on whether the proposed constitutional amendment violated restrictions on the scope and complexity of ballot measures. Opponents argued that combining income tax elimination with sales tax modifications created multiple separate issues that should have been addressed in separate amendments.
August Primary Election Spotlight
Judge Limbaugh’s ruling ensures that Amendment 5 will receive attention during the August 4 primary election, when voter turnout typically remains lower than general elections. The timing could benefit proponents who generally have more resources for voter education and turnout efforts.
The measure requires approval from a simple majority of voters to take effect. If passed, Missouri would join a small number of states without individual income taxes, including Texas, Florida, and Tennessee.
Business groups remain divided on the proposal, with some supporting the elimination of income taxes as an economic development tool while others worry about the impact of higher sales taxes on consumer spending and business operations. The Missouri Association of Realtors has emerged as a leading opponent, expressing concerns about how expanded sales taxes might affect real estate transactions.
The appeal filed Monday evening could potentially delay the ballot placement if higher courts determine that procedural or constitutional violations occurred during the legislative process. However, election officials are proceeding with preparations to include Amendment 5 on August ballots pending any appellate rulings.
