Missouri Capital Gains Tax Elimination for Individuals: What It Means If You’re Selling Property

Missouri capital gains tax elimination

Starting January 1, 2025, individuals will no longer pay Missouri state tax on profits from selling property or other assets. These profits are called capital gains — the money you make when you sell something for more than you paid for it.

Quick example:

• You bought a rental house for $200,000.

• You sell it in 2025 for $300,000.

• Your profit (capital gain) is $100,000.

Before the new law: Missouri taxed a portion of that $100,000.

Now: Missouri taxes zero of that $100,000. You still pay federal taxes, but nothing to the State of Missouri.

Why This Matters for Missouri Property Sellers

Capital gains taxes reduce the amount you keep when you sell. Removing Missouri’s state tax means sellers get to keep more of their profits. This change benefits:

• Homeowners selling their primary residence

• Investors selling rental properties

• Landowners cashing out

• Out-of-state owners selling Missouri property

The only catch? Federal taxes still apply, so you still need to plan for that part.

Who Benefits Most From This New Tax Law and How

If You’re Selling Your Primary Home

Federal law already lets you exclude up to $250,000 of profit if you’re single or $500,000 if you’re married and meet certain requirements. Now, whatever profit is still taxable federally will be fully exempt from Missouri state tax.

If You’re Selling a Rental or Investment Property

Every dollar of profit is normally taxed federally and (in the past) by Missouri. Starting in 2025, Missouri won’t take a cut but, the federal tax bill still comes due. Some of your profit may be taxed as “ordinary income” due to depreciation rules, and that part can still be taxed by Missouri.

If You’re an Out-of-State Owner

You may still need to file a Missouri return, but the capital gain portion from your sale will now be excluded from Missouri tax. You’ll still owe federal tax.

If You Sell Through a 1031 Exchange or Installment Sale

A 1031 exchange still helps with federal tax deferral but now offers no extra Missouri savings for individuals. With an installment sale (payments over time), any profit you receive in 2025 or later that counts as a federal capital gain will be excluded from Missouri state tax.

What Hasn’t Changed

• Federal taxes still apply. Depending on your income, you may owe 0–20% plus an additional 3.8% Net Investment Income Tax.

• Corporations don’t get this benefit yet.

• Ordinary income from a sale (like some depreciation recapture) is still taxed in Missouri.

Key Takeaways for Sellers

1. If you’re planning to sell in 2025 or later, the timing works in your favor.

2. You’ll keep more profit in your pocket from Missouri sales, but federal taxes remain.

3. Work with a tax professional to separate your profits into capital gains and other taxable income.

4. This law makes Missouri one of the most tax-friendly states for individual sellers.

Plan Your Sale with REI Realty Group

This change could mean thousands of extra dollars for Missouri sellers, but the biggest benefits go to those who plan ah

ead. We help clients understand how tax changes fit into their real estate strategy so they can make confident, profitable decisions. Thinking about selling in 2025? Contact REI Realty Group today to create a selling plan that works with the new law — not against it.