Despite a looming budget cliff, some policymakers are pushing to eliminate the income tax in the 2026 legislative session. Proponents may instead look to replace the income tax with an expanded sales tax.
While no detailed plan has been released yet, the sales tax rate would either need to be exponentially increased or the sales tax would need to be expanded to apply to critical services that Missourians rely on every day, like rent, auto repair, or pet grooming.
In either case, the move would make Missouri’s tax structure more upside down, raising taxes on those who can least afford it while giving massive tax breaks to the wealthiest.
The following analysis shows how much Missouri’s sales tax rate would need to increase to make up for the loss of the income tax if the base is not expanded.
Eliminating the state income tax would wipe out nearly 2/3 of the state general revenue budget.
This year, Missouri is expected to collect $8.7 billion in individual income tax (IIT) revenue.
Sales tax collections would need to increase to $11.8 billion annually to fill the gap – or nearly quadruple the current revenue of $3.1 billion.
To generate enough revenue to fully replace lost income tax revenue, Missouri’s current general state sales tax rate would need to increase from 3% to 11.5%.*
* Missouri’s 3% general sales tax is estimated to generate $3.087 billion in FY2026; MBP analysis assumes each percentage point increase in the general sales tax rate will generate $1.029 billion in general revenue.
Combined with earmarked and local sales taxes, the average Missourian would pay nearly 17% in sales taxes on every purchase – with Missourians in the highest tax areas paying closer to 19%.
Replacing the individual income tax with a sales tax would increase taxes on low and middle-income Missourians, while giving a massive tax break to the wealthiest.
[i] Insitute on Taxation and Economic Policy. Missouri: Who Pays? 7th Edition. Accessed September 12, 2025. Available: https://itep.org/whopays/missouri-who-pays-7th-edition/
