Missouri HB594: Full Exemption of Capital Gains Tax on Bitcoin
Missouri's House Bill 594 (HB594), which would eliminate capital gains taxes for residents on cryptocurrency transactions, recently passed a vote in the state's House of Representatives. Under the bill's language, residents can write off “one hundred percent of all income reported as a capital gain for federal income tax purposes.” This means that when Missourians spend or sell their bitcoin, they would owe no state-level capital gains tax. The legislation now awaits a signature from Governor Mike Kehoe (R).
Key Differences from Rhode Island Bill
HB594 differs significantly from a recent Rhode Island bill. Rhode Island's proposal allows residents to spend up to $10,000 per month in bitcoin without incurring a state capital gains tax, while still paying federal capital gains taxes. In contrast, Missouri's bill stipulates that the adjusted gross income for residents under this bill would alter their federal gross income, effectively integrating the exemption into the state's income tax framework. The bill states: “The Missouri adjusted gross income of a resident individual shall be the taxpayer’s federal adjusted gross income subject to the modifications in the [bill].” This broader structural change sets Missouri apart from Rhode Island's more limited approach.
Prospects: Fiscal Trade-offs and Economic Arguments
It remains unclear whether Governor Kehoe will sign the bill. Enacting HB594 would reduce state revenue by nearly $300 million per year, coinciding with underfunded public schools and Kehoe's own acknowledgment of underperformance in the education system. However, some Republicans in the state argue that the law would fuel economic growth and provide tax relief for the average Missourian. If signed, Missouri would become the first state with income taxes to exclude earnings from capital gains, making it a friendly jurisdiction for Bitcoiners seeking to spend their cryptocurrency without incurring state tax liability on fiat gains.
National Tax Policy Context
HB594's passage comes amid a broader push for tax reform in the United States. President Trump recently posted on Truth Social that he is considering eliminating income taxes on those making less than $200,000 per year while using tariffs to offset revenue losses. Missouri's bill aligns with this trend, reflecting a growing political interest in reducing the tax burden on crypto transactions. If enacted, it could set a precedent for other income-tax states to follow, potentially reshaping how digital assets are treated under state tax codes.