Starting January 1, 2025, Missouri will no longer impose a state capital gains tax on individuals. This presents new opportunities—and new planning considerations—for investors, entrepreneurs, and families looking to transfer wealth or exit a business.
What Is Capital Gains Tax?
Capital gains tax is a tax on the profit you make when you sell certain assets, such as stocks, real estate, or a business. Previously, Missouri residents and business owners paid both federal and state capital gains taxes. For example, if you bought a business for $500,000 and sold it for $1 million, the $500,000 gain was previously taxed by both Missouri and the IRS.
What’s Changing in 2025?
As of January 1, 2025, Missouri will no longer tax capital gains on the sale of stocks, real estate, businesses, and other appreciated assets for individual taxpayers. You’ll still pay federal capital gains tax—but not Missouri state tax.
How Estate Planning Clients May Benefit
- More Profits from Sales: You’ll keep more of the proceeds from appreciated investments or real estate.
- Revise Gifting Strategies: Gifting or selling assets during your lifetime may now result in lower total taxes.
- Optimize Trusts and Giving: Trust distributions and charitable gifts of appreciated property may now be more favorable.
Why Business Owners Should Pay Attention
- Business Sale Timing: This change could save you thousands (or more) on the sale of your company.
- Asset Sales: Selling commercial property or business equipment? You’ll benefit, too.
- Succession Options: Transferring the business to heirs or employees may be more flexible and tax-efficient.
What Doesn’t Change
- Federal Capital Gains Tax Still Applies
- Other Missouri Taxes Remain Unchanged
Let’s Review Your Strategy Together
Whether you’re thinking about selling your business, updating your estate plan, or gifting appreciated assets, now is the perfect time to revisit your strategy. Our team at The Kaiser Law Firm can help you evaluate your options and create a plan that takes full advantage of this new law.
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Legal Disclaimer
This article is for general informational purposes only and should not be considered legal or tax advice. Every situation is unique—please consult with your legal or financial advisor for personalized guidance.