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Despite a looming budget cliff, Missouri policymakers continue to propose the elimination of Missouri’s individual income tax (IIT) – often suggesting increased sales taxes to fill the gap. But replacing income taxes with sales taxes would dramatically raise costs for hardworking Missouri families by increasing the cost of everyday necessities. This would hit low and middle-income Missourians hard as sales taxes are a much larger chunk of income compared to the highest income Missourians.[i]
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/
