Missouri Governor Mike Kehoe gave his state of the state speech on January 13, 2026 outlining his legislative priorities for this year.

Top of his list is replacing the state income tax with higher sales taxes.  Opposition to his plan has been loud, so he announced sales tax exemptions for Real Estate, Agriculture and healthcare.

Governor Kehoe said in his state of the state address: “Eliminating the income tax is not about runaway sales taxes, and I will never support extending sales taxes on agriculture, healthcare, or real estate. Missouri’s tax code was built for the past 100 years. Our economy demands one for the next 100 years.”

Kehoe highlighted types of services that might now be taxed including monthly subscriptions, digital services like online advertising, e-books, and AI platforms. Other services that might get sales tax added include hair salons, accounting, legal services, and service labor.

Speaker of the House Jon Patterson has filed the new bill to replace Missouri income tax with higher sales taxes: HJR 165. The Kehoe / Patterson plan will raise taxes on our poorest residents and remove the Hancock Amendment budget protections that have served us well since November 1980.

Balanced Budget? “Today, we delivered a budget recommendation that focuses on the core functions of government and how we can best serve Missourians without overpromising and overspending,” said Governor Kehoe. “Our recommendation proves that state government can live within its means, and our economy can grow and deliver results for taxpayers all at the same time.”

Kehoe’s proposed budget reduces spending by 600 million. This still leaves a deficit of 1.4 billion and it is unclear where the state would get that money. Perhaps House Budget Chair Dirk Deaton and Senate Budget Chair Rusty Black will find budget cuts to eliminate the 1.4 billion in unfunded proposed spending.

A record-breaking number of new bills have been filed that would create new laws, regulations, felonies, taxes, fees and fines: 1,352 House bills and 713 Senate bills. Plus 113 proposed ballot initiatives to go before the voters (SJRs).

Senate President Pro Tem Cindy O’laughlin said: “I refuse to measure the Missouri Senate by the number of bills we pass. I will measure it by the impact it has on the lives of Missourians.” Kudos to Senator O’laughlin for promoting quality vs quantity in new laws.

This is a good time to remind your legislators that the Missouri constitution requires 1 subject per bill with the content of the bill germane to the original title. To vote for a bill not meeting these requirements is a violation of Article 3 of the Missouri Constitution.