This State Just Became the First in the US To Exempt Capital Gains Tax

Nine US states currently have no income tax. If things keep going the way they’re going, there could be a 10th, 11th, and maybe even 12th in the coming years. In 2025, six states — including North Carolina — cut their income tax rates (and more moved to a lower, flat tax). But one state is axing a specific type of income on the path to ultimately ending its income tax.

• Missouri just became the first state to exempt residents from paying capital gains taxes — in other words, profits on the sale of investments like stocks or real estate.
• The change, which will apply to the current tax year, could help Missouri residents save billions on capital gains — they claimed $13.3B in cap gains in tax year 2022.

Path to zero: The shift is the first step towards making Missouri a ‘no income tax’ state, joining states like Mississippi, Kentucky, and Oklahoma on the glide slope to zero. Of course, it’s not something that happens overnight, particularly if you aren’t raising money elsewhere. The change could cost the state up to $625M in FY 2026, which could exacerbate a projected shortfall in Missouri’s FY 2027 year — a concern given its balanced budget amendment.