Missouri voters had one job last night.

They did it decisively.

Amendment 5 — the proposed constitutional amendment that would have given Missouri lawmakers the power to eliminate the state income tax and expand sales and use taxes to replace the lost revenue — failed 83% to 16%.

"Amendments 4 and 5 have been buried so deep in citizen rejection, they should never come back," said Scott Charton, spokesman for Missourians for Fair Taxation and Missourians for Fair Governance.

83% to 16% is not a close race. It's not even a defeat. It's a repudiation — one of the most lopsided rejections of a major tax ballot measure in recent Missouri history. And it happened on a primary election ballot where Governor Mike Kehoe — one of Amendment 5's most prominent champions — put his full political capital behind it.

We've been covering this story since May. This is the final chapter.

What Missouri Voters Were Actually Deciding

We covered the full details of Amendment 5 when it was first proposed and when it landed on the August 4 ballot. For readers just catching up, here's the short version.

Missouri's current state income tax is nearly flat — every dollar earned over $9,191 per year is taxed at 4.7%. That income tax generates around $8.5 billion in state revenue annually — more than half of the state's general revenue.

Amendment 5 would have:

• Required the legislature to phase out the individual state income tax over five years as state revenues grew
• Authorized the expansion of sales and use taxes to whatever categories lawmakers chose — potentially including services, healthcare, and groceries that are currently exempt
• Prevented Missouri from implementing income taxes in the future
• Required local tax rate cuts if local sales tax revenue increased

Rep. Bishop Davidson, R-Republic, who sponsored the amendment, said he believed the possible future sales tax would have been between 4% and 6% higher than current levels to replace the lost income tax revenue. komu.com

Missouri's current state sales tax is 4.225%, not including local taxes. Combined with local additions, many Missouri residents already pay over 9% in combined sales tax. A 4% to 6% increase on top of that would have pushed combined rates toward 13% to 15% in some jurisdictions.

Why It Failed So Badly

The 83% rejection isn't just a policy outcome — it's a data point about what Missouri voters believe. Understanding why Amendment 5 failed this badly tells us something important about the limits of the income-to-sales-tax trade.

Opposition to Amendment 5 came from a coalition that cut across party lines. The Missouri REALTORS ran the most prominent media campaign against it, expressing concern about the broad authority the amendment would give to the legislature. The Missouri Budget Project pointed out the regressive nature of states reliant on sales taxes — where poorer residents pay a higher share of their income in state taxes than wealthy ones do.

The Missouri Budget Project said 80% of people in the state would have seen a net tax increase, with the average Missourian paying over $500 more in taxes annually. Springfield Daily Citizen

Those numbers were devastating to the campaign. An amendment framed as tax relief was producing data showing the majority of voters would pay more — not less. The political message and the fiscal reality were directly contradicting each other.

Jay Hardenbrook with AARP Missouri said he hopes the failure of Amendment 5 sends the message that there is a desire for tax relief, just not in this way.

That's the most important sentence in last night's results. Missouri voters aren't saying they don't want tax cuts. They're saying they don't want their income tax replaced with an expanded sales tax that would cost them more overall.

The REALTOR Factor — Who Funded the No Campaign

Missourians for Fair Taxation and Missourians for Fair Governance — both funded by the Missouri REALTORS — ran the opposition campaign that Charton said buried Amendments 4 and 5.

The REALTORS' involvement is strategically significant. Real estate transactions — both the sale of property and real estate services — were potentially in scope under Amendment 5's broad authorization to expand the sales and use tax base. An amendment that said legislators could tax "any goods and services" was a direct threat to industries currently exempt, and the REALTORS mobilized accordingly.

Their involvement also reflects a broader pattern: when states propose expanding the sales tax base, the industries currently exempt don't wait to find out if they'll be targeted. They fight the expansion proactively. Missouri's failure is partly a story about what happens when multiple industries with economic clout and organized lobbying capacity all oppose the same measure simultaneously.

Governor Kehoe Is Not Done

In a statement issued Tuesday evening, Kehoe said that while Amendment 5 failed, the work "is far from over." "I remain committed to working with the General Assembly in the years ahead on ways to continue cutting taxes, growing our state's economy, and protecting the paychecks of hard-working Missourians." komu.com

The governor's statement is measured but clear — he's not abandoning the income tax reduction agenda, just the specific mechanism. Missouri has already been gradually cutting its income tax rate through legislative action — from 5.9% in 2018 to 4.7% today — without needing a constitutional amendment to do it. That path remains open.

Lawmakers didn't need voter approval to eliminate the income tax — in prior sessions, they already passed income tax cuts. The constitutional amendment was necessary specifically to authorize the expanded sales tax that would replace the revenue. Without that authorization, the legislature can cut income taxes but can't replace the revenue with a broader sales tax base. Springfield Daily Citizen

Kehoe's next move is likely to continue pursuing income tax rate cuts through the legislature while waiting for the political environment to shift enough to try a constitutional amendment again. Given last night's 83% rejection, that shift will take years — not months.

What This Means for Missouri's Sales Tax Landscape

For Missouri businesses and residents, last night's result has immediate practical consequences.

Missouri's income tax stays at 4.7% — no phaseout, no timeline, no five-year clock. The current sales and use tax rate of 4.225% stays as is — no legislative expansion authority, no ability to tax currently exempt services without a new voter authorization.

The constitutional limits on taxing goods and services that Amendment 5 would have curtailed remain in full force. The legislature cannot expand the sales tax base without another ballot measure — and any future attempt faces the formidable precedent of 83% opposition.

For service businesses — law firms, accounting practices, medical offices, real estate services — this result removes a specific threat that had been hanging over their tax status since the amendment was proposed. Services are taxable in Missouri only where specifically enumerated by statute. Amendment 5 would have opened the door to taxing virtually any service without further voter approval. That door is now firmly closed.

For consumers, the most direct impact is what didn't happen. Combined Missouri sales tax rates — currently 9.68% on average — will not climb toward 13% or 15% in this budget cycle.

The National Signal This Sends

Missouri's result lands in a national conversation about income-to-sales-tax trade-offs that is actively happening in multiple states.

Alaska is considering a statewide sales tax for the first time since 1980. South Dakota's income-tax-free model continues to influence legislatures. Louisiana has already made the trade — highest combined sales tax in the country at 10.13%, no income tax on investments. Tennessee funds its entire government through sales tax at 9.61% combined.

These states are often cited as models by advocates of income tax elimination. Missouri's 83% rejection adds a significant data point to that debate: voters who are asked to make the trade explicitly and in a binding constitutional form may respond very differently than voters in states where the trade happened gradually over decades.

The Missouri Budget Project's finding — that 80% of Missourians would have seen a net tax increase — is the number that travels furthest from this result. Every state considering a similar shift will now cite Missouri's analysis. Every legislature that proposes it will face opponents armed with 83%.

Income taxes made up 61% of Missouri's general revenue funds — a figure that underscores why the amendment's failure wasn't just a policy defeat for Kehoe, but a structural affirmation of how Missouri funds its government.

The Lawsuit That Tried to Stop It — And Almost Did

We covered this detail in our earlier reporting — a lawsuit filed in Cole County Circuit Court argued that Amendment 5 bundled too many subjects into a single ballot question, violating Missouri's constitution.

The ballot question asked voters whether they wanted to require the legislative phase-out of the individual state income tax, authorize the expansion of sales and use taxes, curtail constitutional limits on taxing goods and services, and require local tax rate cuts — all in a single yes or no question. FOX 2

The court ultimately allowed the measure to proceed to the ballot. Voters didn't need the lawsuit to stop it. They did it themselves, by a margin of 83% to 16%.

The Bottom Line for Missouri Businesses

Missouri's sales tax structure is stable. The threat of a dramatically expanded base — covering services, healthcare, real estate, and anything else the legislature might have chosen — is gone for this political cycle.

For businesses that were modeling potential exposure under an expanded Missouri sales tax base — particularly service businesses currently exempt — that planning exercise is no longer urgent. Missouri's tax landscape in 2027 will look essentially like it does today.

For businesses selling goods into Missouri — the categories currently taxable under Missouri's 4.225% state rate and applicable local rates — nothing changes. Rates stay where they are. Filing obligations stay the same. Compliance requirements are unchanged.

The Missouri sales tax story that started in May with a House vote, ran through Governor Kehoe's August ballot decision, survived a lawsuit, and ended last night with 83% of Missouri voters saying no — is over.

For now.

Operating a business in Missouri and want to understand your current sales tax compliance obligations — or planning ahead for what Missouri's tax landscape looks like in 2027 and beyond? Book a free consultation with our team at sales.tax. We'll walk through your specific situation and make sure your compliance is current under Missouri's existing rules.

Today is the deadline.

Missouri Governor Mike Kehoe has until May 22 to decide whether the state's proposed constitutional amendment — which would give lawmakers power to expand the sales tax and phase out the income tax — will appear on the August 4 primary ballot or wait for the November 3 general election.

But there's a new wrinkle that wasn't there a week ago.

A lawsuit filed in Cole County Circuit Court is now seeking to knock the proposed amendment off the ballot entirely — arguing that legislators bundled too many subjects into one proposal and wrote misleading ballot language.

Missouri's biggest tax fight in a generation just got a lot more complicated.

What the Proposal Does — Quickly

The amendment, passed by the Missouri House 95-59 and approved by the Senate, would amend the Missouri Constitution to:

• Begin phasing out the state's personal income tax over five years
• Give the legislature a five-year window to expand sales taxes to "transactions involving any goods and services" to replace lost revenue
• Reduce personal property and local taxes as local revenues increase
• Protect local funding for public schools

Missouri gets about 65% of its state revenue from income tax and about 22% from sales tax. The math is stark: to replace income tax revenue without expanding the sales tax base, the state would need to increase its sales tax rate by as much as 8.5%.

Which is why expanding what gets taxed — not just the rate — is central to the plan.

August or November? The Strategic Choice

Kehoe's decision today isn't just procedural. It's strategic.

Governors who have used this power typically shift proposed ballot measures to the August primary, which usually has lower turnout. Lower turnout generally favors motivated, organized voter blocs — in this case, the business community and tax reform advocates who have been championing this proposal.

But the historical record cuts both ways. In 2020, Gov. Parson moved Medicaid expansion to August and it passed 53-47. But in 2018, lawmakers moved a right-to-work referendum to August — and voters overwhelmingly repealed it.

A recent poll from Torchlight Strategies found that around 37% of likely voters would support eliminating the income tax, while around 49% would oppose it. Those numbers suggest the amendment faces an uphill battle regardless of which election it lands on. Mass.gov

The New Lawsuit — And Why It Matters

Just days ago, a new threat emerged that could sideline the debate entirely.

The lawsuit, filed by attorney Chuck Hatfield on behalf of a Missouri resident, argues that legislators bundled too many subjects into a single ballot proposal — a violation of Missouri's constitution, which generally requires ballot measures to address a single subject.

The lawsuit also challenges the ballot summary language approved by lawmakers, arguing it does not make clear that voters would be authorizing a broader sales tax expansion in order to replace income tax revenue. Galvix

The ballot summary asks voters whether the Missouri Constitution should be amended to "phase-out the individual income tax based on revenue growth," "reduce personal property and other local taxes when local revenues increase," "modify the sales and use tax to eliminate income tax and reduce local taxes," and "protect local funding for public schools and other purposes."

Critics say that's four separate policy questions bundled into one yes or no vote — and that average voters have no way of understanding that a "yes" on income tax elimination is simultaneously a "yes" on expanding sales taxes to services they've never paid tax on before.

The lawsuit asks the court to permanently block Missouri's Secretary of State from placing the measure on any ballot.

What Kehoe Has Promised — And What the Amendment Doesn't Guarantee

Governor Kehoe has tried to reassure Missourians worried about what a sales tax expansion could look like in practice.

Kehoe has said he would not support expanding the sales tax to agriculture, health care, or real estate. But given that there are no specific carveouts in the amendment itself, it would be up to Kehoe and the legislature to prevent those expansions — not voters. Shopify

That gap between the governor's promises and the amendment's actual language is precisely what opponents are hammering. The Missouri Bar and the Missouri Association of Realtors — two powerful groups with real experience in ballot campaigns — have both come out against the plan.

House Minority Leader Ashley Aune put it directly: "Where are we going to get that revenue? We're going to get that revenue off the backs of Missourians who are living paycheck to paycheck, seniors who already can't afford their medications or to stay in their homes." Mass.gov

The Revenue Numbers Everyone Is Debating

The scale of what's being proposed is worth sitting with for a moment.

Missouri's individual income tax raises roughly $8.5 to $9 billion every year — about 60 to 65% of state general revenue. It is the largest source of funding for schools, public safety, and core state services. Avalara

Kehoe frames it simply: "Nine billion a year comes out of their pocket and goes to the government. We're proposing that they keep that money and make the decisions on how they spend that." Shopify

Opponents frame it just as simply: that $9 billion has to come from somewhere. And if it comes from an expanded sales tax, the burden shifts from income earners — where the tax is progressive — to consumers at the register, where the tax is the same for everyone regardless of what they earn.

What Missouri Businesses Need to Watch

For businesses operating in Missouri, this story has three active threads to follow simultaneously:

1. The ballot timing decision — today. Kehoe's choice between August and November affects how much time businesses have to understand and prepare for what a "yes" vote would mean for their tax obligations.

2. The lawsuit. If the Cole County court grants an injunction, the amendment could be pulled from the ballot entirely — at least temporarily. A ruling could come quickly given the deadline pressure.

3. The policy itself. The amendment gives a five-year window to expand sales taxes to make up for lost income tax revenue. Lawmakers would have to change policies to both lower the income tax and raise other taxes to make up for that loss. Service businesses currently exempt from Missouri sales tax — law firms, accounting practices, medical offices, real estate services, consultants — are all potentially in scope. The amendment doesn't tax any of them automatically, but it gives the legislature the authority to do so without returning to voters. Mass.gov

The five-year window starts the moment voters approve the amendment. The legislative pressure to act begins immediately after.

Missouri is ground zero for the biggest sales tax debate in the country right now. Whatever happens today — and in court — will set the trajectory for one of the most consequential tax votes any state has held in decades.

If you operate a business in Missouri — especially a service business currently exempt from sales tax — now is the time to understand what this proposal could mean for your compliance obligations. Book a free consultation with our team at sales.tax. We'll walk through your exposure and help you prepare for whatever the ballot brings.

Missouri is considering the most dramatic sales tax overhaul any state has attempted in decades.

The Missouri House voted 95-59 to send a proposed constitutional amendment to the ballot that would direct future legislatures to cut personal income tax rates as state revenue increases — and allow the General Assembly to expand the sales tax to transactions involving any goods and services.

Governor Mike Kehoe has until May 22 to decide whether the measure will appear on the August 4 primary ballot or the November general election.

That deadline is days away. And the decision will set the stage for what could be the largest sales tax expansion in Missouri history.

What the Proposal Actually Does

This isn't a simple rate change. It's a structural overhaul of how Missouri funds its government.

Right now, Missouri collects billions in state income tax revenue every year. The proposal would chart a path to eliminate that entirely — and replace the lost revenue with an expanded sales tax base.

Lawmakers would have a five-year window to expand transaction-based taxes, like sales taxes, to make up for revenue lost by eliminating the income tax.

If approved by voters, Missouri would become the tenth state to eliminate its state income tax, joining neighboring Tennessee, which repealed its state income tax in 2021. SmartAsset

The key word in all of this: expand. Missouri's current sales tax applies to goods but exempts most services. To replace income tax revenue, lawmakers would almost certainly need to start taxing things that have never been taxed before — haircuts, legal services, accounting fees, medical visits, real estate transactions.

The Numbers Behind the Debate

The scale of what's being proposed is hard to overstate.

The nonpartisan Missouri Budget Project said eliminating the income tax while increasing sales taxes will cost up to 80% of Missourians more overall, while blowing a $5 billion hole in the state budget. AccurateTax

The Missouri Budget Project estimates that 80% of Missourians would see their net tax cost increase. In comparison, the 20% of Missourians — defined as those making $300,000 or more — would see their overall taxes decrease. TaxHero

The math reflects a fundamental difference between how income taxes and sales taxes work. Income taxes are progressive — higher earners pay a higher percentage. Sales taxes are regressive — everyone pays the same rate, but lower-income households spend a larger share of their income on taxable purchases.

Eliminating one and expanding the other shifts the tax burden down the income scale.

Who Supports It and Who Doesn't

Supporters argue the change would make Missouri more competitive.

Governor Kehoe called it "the first step in keeping our promise to make Missouri more competitive, attract jobs and investment, and let families keep more of what they earn." Republicans framing the proposal say it gives Missourians more control over what they're taxed on — you pay when you choose to spend, not just for earning a paycheck. Taxfyle

Opponents see it differently.

Senate Minority Leader Doug Beck called the proposed amendment the pave the way for the largest tax increase in Missouri history, warning it would mean more taxes for most Missourians — and that the people hit hardest are retirees, senior citizens, and disabled veterans who pay no income tax now but would pay higher sales tax on doctors' visits and prescription medicines. Quizlet

Democrats warned that if it passes, higher sales taxes will shift the tax burden to poorer Missourians who must spend most or all of their income on necessities — feeding their families, keeping a roof over their heads, buying medicine.

What Gets Taxed — and What Might

Here's the compliance reality that businesses in Missouri need to start thinking about now.

If the amendment passes and lawmakers follow through on expanding the sales tax base, virtually no industry is safe from review. Items likely to be taxed if the measure passes include haircuts, salon visits, and plumber services. SmartAsset

Industries currently protected by strong exemptions — agriculture, real estate, healthcare — would face enormous pressure. Many worry that should those exemptions disappear, it would hurt seniors and make people choose between meals and medication.

For businesses that currently provide tax-exempt services in Missouri, this is not a distant hypothetical. The five-year window for lawmakers to act starts the moment voters approve the amendment. Service businesses that have never had to think about sales tax collection could find themselves registering, filing, and remitting within the same legislative session.

The Timeline to Watch

Here's how the next several months play out:

• May 22 — Governor Kehoe's deadline to choose August or November ballot placement
• August 4 — Missouri primary election (if Kehoe chooses this date)
• November 3 — Missouri general election (the alternative)
• If approved by voters — lawmakers have until January 1, 2032 to eliminate the income tax, with a five-year window to expand the sales tax base

If the income tax isn't eliminated by January 1, 2032, the tax may continue until it is ended. There's no automatic snap-back — the pressure to follow through would be sustained and political. Taxfyle

Why This Matters Beyond Missouri

Missouri isn't the only state exploring this trade. The trend of shifting from income-based to consumption-based taxation has been building for years.

States like Tennessee — already income-tax-free — have become reference points for what this looks like in practice. And the argument that a consumption tax is simpler, more predictable, and harder to avoid has real appeal to both lawmakers and certain segments of the business community.

If Missouri voters approve this amendment, expect other states to take notice. It would be the most significant state-level tax restructuring in a generation — and a signal to legislatures across the country that voters are open to rethinking how government gets funded.

If you operate a business in Missouri — especially a service business currently exempt from sales tax — now is the time to understand what this proposal could mean for your compliance obligations. Book a free consultation with our team at sales.tax. We'll walk through your exposure and help you prepare for whatever the ballot brings.