Missouri’s Amendment 5: Understanding the Income Tax Phase-Out

Missouri’s Income Tax Phase-Out: Understanding Amendment 5

Missouri voters will consider a significant change to the state’s tax system in August 2026. Governor Mike Kehoe has placed Amendment 5 on the ballot, a proposal that aims to phase out and eventually eliminate the state’s individual income tax. This measure is designed to modernize the tax code while including specific protections for public school funding and requiring adjustments to local taxes. The decision to move this proposal to a statewide vote gives lawmakers additional time to prepare for its potential implementation, should it be approved by the electorate.

The Core of Amendment 5

Amendment 5, also known as HJR 173/174, proposes a constitutional amendment to gradually remove Missouri’s individual income tax. The process of phasing out this tax is tied to the state’s revenue growth, meaning the elimination would occur over time as state revenues increase. This approach is intended to ensure fiscal responsibility during the transition away from income tax collections. The governor’s office has framed this as a modernization of the state’s tax structure, aiming to make Missouri more competitive economically.

Safeguarding School Funding and Local Taxes

A key component of Amendment 5 is its commitment to protecting public school funding. The measure mandates that local funding for public schools will be preserved, ensuring that educational institutions are not negatively impacted by the shift away from income tax revenue. Additionally, the proposal includes provisions for reductions in property taxes and other local taxes. These reductions are intended to offset any potential increases in local sales tax revenue that might arise as a consequence of the income tax phase-out. This multi-faceted approach seeks to balance the elimination of income tax with the maintenance of essential public services and local tax structures.

The Legislative Role in Implementation

While voters will decide whether to approve Amendment 5, the state legislature will play a crucial role in its implementation. The amendment’s language indicates that the phase-out process will be contingent on revenue growth metrics, which the legislature would need to define. Furthermore, lawmakers would be responsible for enacting the specific mechanics of the tax reductions, including those tied to local sales tax revenue increases. This legislative involvement ensures that the transition away from income taxes is managed carefully and in accordance with the amendment’s directives, while also maintaining the stipulated protections for school funding.

A Broader Context of Ballot Measures

Amendment 5 is not the only statewide question Missouri voters will face on the August 4, 2026, primary ballot. It will appear alongside other proposed amendments, including Amendment 1, Amendment 2 (HJR 23/3), and Amendment 4 (HJR 3). The inclusion of Amendment 5 on this ballot allows for a direct vote on a central revenue question for the state. The outcome will determine whether future revenue growth will trigger the phaseout of the individual income tax, with the understanding that local tax offsets and school funding protections will remain in place.

Frequently Asked Questions