Missouri bill to eliminate crypto capital gains tax heads to governor’s desk

Missouri is just a step away from becoming the first US state to abolish capital gains tax on crypto profits, with a bill now awaiting the governor’s signature.

On Wednesday, Fortune reported that the Missouri Legislature passed the final version of House Bill 594, which would eliminate capital gains taxes for cryptocurrency traders starting this year.

The bill now heads to Republican Governor Mike Kehoe, who has already expressed strong support for the measure.

Pitched as a way to stimulate investment and economic activity, the bill cleared the Republican-controlled legislature despite pushback from Democrats. 

To gain enough votes, lawmakers added provisions for senior and disabled tax relief, along with sales tax exemptions for feminine hygiene products and diapers.

While the bill applies broadly to capital gains on long-term asset sales, crypto traders and advocates have welcomed the move. 

Missouri House Speaker Pro Tem Chad Perkins, who introduced the bill, said the goal was to unlock economic growth by removing what he described as a tax penalty on investment.

Experts are divided

Capital gains taxes apply to profits made from selling assets like stocks, real estate, and cryptocurrency.

At the federal level, long-term capital gains, those on assets held for over a year, are taxed at lower rates than regular income.

Most states follow suit, taxing capital gains just like wages. Missouri is currently among 32 states and D.C. that do so, according to the Tax Foundation.

Supporters of the repeal argue that taxing capital gains discourages people from selling assets and reinvesting the proceeds into the economy.

Eliminating taxes, according to some experts, could increase economic dynamism, attract investment, and ultimately enrich state revenues through broader growth.

“When you tax something, you get less of it,” said Jonathan Williams from the American Legislative Exchange Council, which backed the bill.

“The idea is, of course, you want more investment in your state,” he was quoted as saying.

Critics, on the other hand, warn that the rule could unfairly benefit the wealthiest residents. 

According to the Missouri Budget Project, which opposes the repeal, only about one in five taxpayers in the state reported capital gains in 2022.

The group estimates that 80% of the proposed tax relief would go to the top 5% of earners.

The group warns that Missouri could lose up to $600 million a year, money that would otherwise support public education, healthcare, and infrastructure.

Other experts, including Princeton economist Owen Zidar, remain skeptical, arguing that any surge in asset sales following the repeal would likely be short-lived and insufficient to offset the long-term drop in tax revenue.

Push for pro-crypto legislation in the US

Missouri’s pro-crypto momentum aligns with a growing trend among Republican-led states exploring blockchain and digital asset adoption. 

States like Texas and Wyoming are pursuing similar initiatives, including reserve funds and public treasury investments in Bitcoin.

Earlier this year, Missouri lawmakers introduced House Bill 1217 to create a “Bitcoin Strategic Reserve Fund” and allow state and local agencies to accept cryptocurrency for taxes, fees, and fines, with payers responsible for covering transaction costs.

On the national level, the idea of exempting capital gains on cryptocurrency gained renewed political traction this year following comments by Eric Trump, executive vice president of the Trump Organization and son of US President Donald Trump, who proposed a 0% capital gains tax on US-based crypto projects.

This proposal has since been associated with the Trump administration’s broader crypto-friendly stance.

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