What’s new in Missouri for 2026: the rate holds, capital gains stay off the return, and the federal deductions stop at the state line

The 2026 Missouri return will look like the 2025 return with the numbers moved up for inflation. The top rate is 4.7% for a second year, because the revenue trigger that would have cut it to 4.6% was not met. The standard deduction rises to the new federal figures, $16,100 single and $32,200 married filing combined. The 100% capital gains subtraction, new on the 2025 return, is in its second year with no sunset. And the four federal deductions everyone heard about in 2025, for tips, overtime, seniors and car loan interest, do nothing on the Missouri return; the Department of Revenue has said so in writing. Two things did change for ordinary households: the senior Property Tax Credit was expanded by law effective January 1, 2026, with the new figures to come on the 2026 forms, and voters settled the income tax’s future in August by rejecting the amendment that would have phased it out.

Missouri starts its return from federal adjusted gross income. That one fact explains most of this page. Anything the federal law changed above the AGI line, such as bonus depreciation for a business or the HSA deduction, flows into Missouri automatically. Anything it changed below the line, such as the new deductions for tips and overtime, never arrives, and Missouri substitutes its own deductions in their place. The legislature did not have to vote on any of it, and in 2026 it did not.

The rate: 4.7% again

Missouri cut its top rate from 4.8% to 4.7% for 2025 under a 2022 law that promised further cuts of 0.1 point, down to 4.5%, each year the state’s net general revenue grew by at least $175 million over the prior high (verify). Fiscal year 2026 collections fell about 2.8% to roughly $13.05 billion (verify), so the trigger was not pulled, and 4.7% holds for 2026 and, barring a surprise, for 2027 as well. The Department has not formally announced the 2027 rate as of this writing (verify).

What did move are the bracket lines. Missouri’s eight brackets are indexed for inflation each year, and for 2026 they run from a 0% bracket on the first $1,348 of Missouri taxable income to the 4.7% rate on everything over $9,436, up from $1,313 and $9,191 for 2025. Because the top bracket begins so low, the indexing is worth a few dollars to anyone; the whole set of lower brackets saves at most about $180 of tax compared with a flat 4.7%. For planning, Missouri is 4.7% of everything above the deductions.

2026 brackets and standard deductions are from the Department’s 2026 Form MO-1040ES; the 2025 figures are from its What’s New page. The 2026 Form MO-1040 instructions had not been published when this was written, so the extra deduction for age and blindness and the dependent’s standard deduction are shown as to come.

The July 2025 federal law, item by item

The federal tax law signed in July 2025 made permanent the larger standard deduction and added several new deductions. Here is what each one does, or does not do, in Missouri.

Capital gains, year two

The biggest Missouri change of the decade was first claimed on 2025 returns: 100% of the net capital gain reported on the federal return is subtracted on Form MO-A, Part 1, line 18, in figuring Missouri adjusted gross income. Short-term and long-term gains both qualify; stocks, real estate, a business sale and crypto all qualify. Losses give no subtraction, because a net loss has already reduced federal AGI. Gains that pass through from a partnership or S corporation that elected Missouri’s pass-through entity tax do not qualify, and trusts and estates get nothing. Qualified dividends are not capital gains and are taxed at 4.7%.

For 2026 the subtraction is unchanged. No bill to repeal or cap it passed, and the August ballot measure did not touch it. One loose end: the Department’s own FAQ says in one place that the subtraction applies to tax years beginning on or after January 1, 2026, and in another that it is effective for 2025. The What’s New page and the 2025 Form MO-A both say 2025, and 2025 returns were filed claiming it. Anyone who sold something in 2025 and did not take the subtraction should look at an amended return. A related 2026 addition, House Bill 754, separately exempts gains on specie legal tender, gold and silver coin, from 2026; since all capital gain is already subtracted, it changes little.

What the 2026 legislature passed

The Department’s summary of the 2026 session lists very little that reaches an individual return. The items an ordinary household might meet:

Property Tax Credit expanded. The senior and disabled “circuit breaker” credit, up to $750 for renters and $1,100 for owners under the 2025 rules with household income limits between $27,200 and $34,000, was changed by House Bills 594 and 508: higher income limits, larger credits, a new calculation formula and annual inflation adjustments, effective January 1, 2026 and reflected on the 2026 Form MO-PTC and MO-PTS. The Department has not yet published the 2026 figures; they are shown as to come throughout this edition. This is the one 2026 change that puts money in a household’s pocket, and the people it helps, renters and owners 65 or older or disabled on modest incomes, are the people least likely to hear about it.

Notices by first-class mail. House Bill 2180 lets the Department send notices by first-class mail or electronically rather than certified or registered mail, effective August 28, 2026. A Missouri notice will now look like any other envelope. Open everything from Jefferson City.

Further out. House Bill 3231 creates an angel investment credit for individuals who invest in qualifying Missouri start-ups, effective January 1, 2027. Senate Bill 98 and House Bill 754 change how resident estates and trusts apportion income and claim credit for tax paid elsewhere, from 2026, which reaches a household only through a trust’s Form MO-1041. And a $9 user fee now attaches to every document recorded with a county recorder (Senate Bill 938), which anyone closing on a house will see on the settlement statement.

What died. Senate Bill 1440, which would have limited the 529 deduction to Missouri’s own MOST plan, did not pass; contributions to any state’s plan still qualify, up to $8,000 per taxpayer or $16,000 married filing combined. No bill to match the federal tips, overtime or senior deductions passed. No bill changed the pension exemptions, the $6,000 private pension figure, or the business income deduction.

Credits that changed for 2025 and carry into 2026

The Champion for Children credit rose from 50% to 70% of contributions to qualifying child advocacy agencies, with a $50,000 individual cap, for 2025 and later; the Youth Opportunities credit also rose to 70%. A new Homestead Disaster credit, up to $5,000, repays the insurance deductible paid by a homeowner in a 2025 presidential disaster area. It is nonrefundable but carries forward up to 29 years, and since the deductible had to be incurred in 2025, the carryforward is what reaches the 2026 return.

The ballots

April 7, 2026. Kansas City voters renewed the city’s 1% earnings tax (Question 1) by about three to one, and St. Louis voters renewed theirs (Proposition E). Both run five more years, through at least 2031. Nothing about either tax changed: residents pay 1% on all earnings, nonresidents pay 1% on work physically performed in the city, and employers withhold it in W-2 box 19.

August 4, 2026. Amendment 5, which would have begun phasing out the state income tax and let the legislature broaden the sales tax to replace it, failed by roughly 83% to 17%. The rate schedule, the 2022 trigger law and the capital gains subtraction all stand exactly as they were.

November 3, 2026. Amendment 7, the Show-Me Prosperity Fund, would have created a constitutionally protected endowment, invested in index funds, whose earnings could eventually offset state taxes, with annual draws capped at 3% of the fund’s five-year average value. Voters rejected it, about 60% to 40%. It would have put no money into the fund and changed no tax for 2026 or 2027, so its defeat changes nothing on a return. In August 2026 voters had also rejected Amendment 5, a plan to phase out the income tax, by 83% to 17%. There was no property tax or sales tax question on the November ballot.

What to expect on the 2026 return

Same form, same lines. The numbers that moved are the standard deduction, the bracket lines, the pension cap, and whatever the 2026 Property Tax Credit chart turns out to be. The numbers that did not move are the ones most people wish had: the $6,000 private pension exemption and its $25,000 / $32,000 income lines, the $5,000 / $10,000 cap on the federal income tax deduction, and the $8,000 / $16,000 529 limit, none of which is indexed.