Missouri voters face a proposal to eliminate the state’s income tax and replace it with expanded sales taxes, a plan that includes the possibility of taxing healthcare services and prescription drugs. The ballot measure, backed by the Republican-dominated legislature and Governor Mike Kehoe, would give lawmakers the authority to broaden the tax base. Currently, prescription drugs and doctor visits are exempt from state sales tax, but supporters of the amendment argue that healthcare may not be the target of new levies.
Leslie Ortbals, a 27-year-old healthcare advocate, manages multiple chronic illnesses with a regimen of 10 medications daily. She is concerned that the proposed constitutional amendment could raise the cost of her care, even if drug prices themselves remain stable. Ortbals expressed skepticism about political promises to protect essential services at a June press event organized by Progress MO.
Ortbals stated that politicians want Missourians to trust them when they say not to worry about medications and healthcare being up for grabs. She has spent enough time in Jefferson City to know better, having watched them speak about protecting life while making lifesaving healthcare less accessible.
Most states already tax over-the-counter medications, and Illinois is the only neighbor to tax prescription drugs. Delaware, Hawai‘i, New Mexico, and Washington also levy taxes on physician services, dental care, and medical laboratories. While federal law prohibits states from taxing services covered by Medicare and Medicaid, Missouri’s proposed change would give the legislature broad discretion over what gets taxed.
State officials project that eliminating the income tax would require a significant increase in sales tax revenue to avoid budget shortfalls. About two-thirds of the state’s general revenue comes from income taxes, amounting to roughly $8.7 billion in 2026. Without that revenue, state services could face deep cuts, which would have a significant impact on healthcare services and other essential programs.
The proposal comes at a difficult time for Missouri’s fiscal outlook. Governor Kehoe restricted about $440 million in spending this year due to lagging revenues. The state legislature has passed a series of tax cuts since 2022, including the repeal of capital gains taxes. While federal COVID-19 aid propped up the budget in recent years, the surplus is dwindling.
Additionally, the state is projected to lose about $14 billion in federal Medicaid funding over the next decade due to changes in federal policy. This loss of funding will put a strain on the state’s budget, making it even more challenging to maintain essential services.
Advocates for the tax overhaul, such as Elias Tsapelas of the Show-Me Institute, argue that cutting income taxes will stimulate economic and population growth. Tsapelas doubts healthcare will be taxed and suggests that if it were, the state could design the system to avoid burdening lower-income residents, similar to New Jersey’s tax on cosmetic procedures.
However, Jay Hardenbrook, advocacy director for AARP Missouri, warns that the amendment gives special interest groups too much power to lobby for exemptions. He argues that the legislature would likely prioritize the interests of these groups over the needs of lower-income residents, which could lead to increased costs for essential services like health insurance.
Hardenbrook argues that without the income tax, the state would likely be forced to cut services like home and community-based care to balance the budget. This would have a devastating impact on many families who rely on these services to care for their loved ones.
Carl Davis of the Institute on Taxation and Economic Policy noted that Missouri’s approach is nearly unprecedented. Alaska is the only state to have repealed a broad-based personal income tax that previously accounted for a significant portion of the budget, but that repeal was tied to an oil boom.
Missouri has not struck oil, and its economy lacks the same resource-driven revenue source. This makes it even more challenging for the state to maintain its essential services without the income tax.
Ortbals emphasized that the proposal could turn chronic illness into a financial crisis for many families. She wants a Missouri where young people can afford to stay, where families can afford to grow, and where chronic illness does not become financial ruin.
Ortbals’ concerns are shared by many Missourians who are already struggling to afford medical care. The proposed constitutional amendment has the potential to exacerbate this problem, making it even more difficult for people to access the care they need.
