30-Year Rate Hits 6.9%: Weekly Mortgage Market Diagnostic — Aug 11, 2026

What Changed

Missouri voters will decide on Amendment 5 in the August 2026 primary election. If passed, the amendment authorizes state lawmakers to phase out Missouri's individual income tax, currently at a top rate of 4.95%. The timeline and replacement revenue mechanism remain unspecified, creating material uncertainty for Missouri residents with $500K+ in taxable income.

The Numbers That Matter

Income Level	Current MO Tax (4.95%)	Potential Savings at Full Phase-Out	Federal Deduction Loss (24% Bracket)	Net Annual Benefit
$200K	$9,900	$9,900	$2,376	$7,524
$500K	$24,750	$24,750	$5,940	$18,810
$1M	$49,500	$49,500	$11,880	$37,620

Federal deduction loss reflects the reduction in state and local tax (SALT) deductions, capped at $10,000 but still relevant for those itemizing other deductions. Full phase-out assumes no offsetting tax increases (sales, property, or consumption taxes).

What This Means for Your Portfolio

For a Missouri resident with $1M in annual taxable income, full elimination of the state income tax yields $49,500 in gross annual savings. Net of lost federal deductions, the benefit is $37,620 per year. Over a 10-year period at a 5% discount rate, that yields approximately $290,400 in present value. That figure assumes no replacement revenue mechanism that offsets the income tax cut through higher sales or property taxes.

Scenario Analysis

Household Income	Annual MO Tax Paid Now	10-Year PV of Savings (5% Discount)	Scenario: 50% Offset by Sales Tax	Net 10-Year PV After Offset
$500K	$24,750	$145,200	2% sales tax increase	$72,600
$1M	$49,500	$290,400	2% sales tax increase	$145,200
$2M	$99,000	$580,800	2% sales tax increase	$290,400

The offset scenario models a 2 percentage point increase in Missouri's state sales tax (currently 4.225%). For a household spending $200K annually on taxable goods and services, that generates $4,000 in additional annual sales tax. The table reflects 50% erosion of the income tax benefit for households with consumption equal to 40% of gross income.

The Number You Have Not Modelled

Amendment 5 authorizes the phase-out but does not mandate a timeline or funding mechanism. Missouri's general revenue is 55% dependent on individual income tax. Legislative implementation could stretch over 10 to 15 years or trigger immediate consumption tax hikes. A household earning $1M in W-2 income could see the benefit delayed until 2035 or later, reducing the present value of the tax cut by 40% to 60% depending on the discount rate applied.

Mechanics of the Phase-Out

Missouri ranks 13th nationally in state income tax burden for high earners. Neighboring Tennessee and Texas have no state income tax. Florida eliminated its income tax in 1855 and has seen net migration of 300,000 residents annually since 2020, many from high-tax states. Missouri's phase-out positions the state competitively but only if replacement revenue does not shift the burden to property or consumption taxes that disproportionately hit high-net-worth households with real estate holdings or discretionary spending.

The revenue gap is $7.5 billion annually based on 2024 collections. Lawmakers could replace this with a combination of higher sales taxes (each 1 percentage point generates approximately $800M), elimination of tax credits (currently $1.2B annually), or cuts to state services. The mix determines whether high earners see a net benefit or simply a tax structure shift with no material change in total liability.

What This Changes for Domicile Planning

For households with $2M+ in annual income and flexibility in state residency, Missouri becomes a neutral to positive domicile option if the phase-out occurs without offsetting consumption taxes. A household relocating from California (13.3% top rate) to Missouri post-phase-out saves $133,000 annually on $1M in taxable income. That compares favorably to Tennessee or Texas but only if Missouri does not raise property taxes or sales taxes above 8% combined state and local.

Current Missouri property tax effective rates average 0.91%, below the national median of 1.01%. If the income tax phase-out triggers a 0.3 to 0.5 percentage point increase in property tax rates to fund local services, a $2M home sees an additional $6,000 to $10,000 in annual property tax. That erodes 15% to 25% of the income tax benefit for households holding significant Missouri real estate.

Frequently Asked Questions

Q: Does the amendment specify a timeline for the phase-out? A: No. Amendment 5 authorizes the phase-out but leaves the schedule and replacement revenue mechanism to future legislation.

Q: What is the maximum annual savings for a $1M income household? A: $49,500 gross, or $37,620 net of lost federal SALT deductions, assuming no offsetting state tax increases.

Q: How does Missouri's current top rate compare to neighboring states? A: Missouri's 4.95% is higher than Tennessee (0%) and below Illinois (4.95% flat), Kansas (5.7%), and Arkansas (4.4%).

Q: What is the revenue gap if the income tax is fully eliminated? A: $7.5 billion annually, representing 55% of Missouri's general revenue based on 2024 collections.

Run the Numbers

This article is for informational purposes only and does not constitute professional tax or financial advice. For Missouri residents with $500K+ in annual taxable income, model the net benefit across consumption tax and property tax offset scenarios before adjusting domicile or withholding elections. Consult a qualified tax professional or financial advisor regarding your specific situation.

Run the Numbers: Capital Gains Tax Terminal on CalcMoney — see your exact figures under current market conditions.

Data sourced from State Tax Policy Changes. Rates and thresholds are for informational purposes only. Consult a licensed financial advisor before making mortgage, investment, or tax decisions.

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