Missouri governor calls for income tax phase-out, opts in to federal school choice program

As he greeted members of the Missouri General Assembly on his way to the dais for his State of the State Address Tuesday, Gov. Mike Kehoe donned a starkly colored green tie – possibly serving as a foreshadowing of the “green” he wants to save Missouri taxpayers by phasing out the individual income tax.

Standing before the legislature exactly one year after taking his oath of office, the governor reflected on a year of resilience, and recommitted his administration to the mission of securing the American Dream for every hardworking Missourian. 

Central to Kehoe’s conservative agenda is a fundamental restructuring of state government to ensure it serves the people with maximum efficiency. 

“We are charged not only with preserving what we inherited, but with strengthening it for those who come next,” the governor said.

“That responsibility includes securing the American Dream for those willing to work for it, and protecting the values that built this state and nation while building a foundation for growth strong enough to support not just the next year or the next term, but the next generation of Missourians.

“The clearest test of whether we are serious about discipline and growth is how efficiently government does its work to best serve the people.”

Before the speech, the governor signed an executive order launching Missouri GREAT. The initiative brings successful business leaders into the fold to recommend solutions that eliminate waste and improve accountability within state agencies. 

“Our belief is simple: smaller government equals better government,” Kehoe said. “Not because it does less, but because it does what matters: It focuses on its core functions and how to best serve Missourians, without overpromising and without overspending. It means discipline, not excess – planning, not wishful spending, and respect for every dollar Missouri families entrust us with.”

This commitment to efficiency is paired with a fiscally responsible budget that cuts over $600 million from core spending to correct future imbalances.

“It cuts more than $600 million from the core, starting to correct a future spending imbalance of potentially over $2 billion.

“Additionally, our recommendation works to bring ongoing spending back in line with ongoing revenues – all while meeting priority and mandatory spending requirements such as Medicaid match, child care subsidies and disaster relief – without cutting core funding for higher education and without cutting the K-12 foundation formula.

“Last legislative session, we provided record funding for the K-12 education formula, an increase equivalent to ten years of funding increases.

“And remember: Missouri is one of only three states that have Medicaid expansion funding required in our Constitution. That limits the ways we can balance the budget.

“Since Fiscal Year ’22, over 3,400 new budgetary items have been added, at the cost of nearly $13 billion in new general revenue spending. Again, that’s just general revenue; this does not include federal dollars. All of this demonstrates the historic imbalance we must fix.”

The most ambitious pillar of the governor’s plan, of course, is the phased elimination of the state’s individual income tax. 

“Missouri brings real strengths to the table when recruiting jobs and investment. But when we’re competing against states like Tennessee and Texas, states with no individual income tax, too often the conversation ends before it truly begins. And the consequences are real.

“Missouri’s population is stagnant. Over the past decade, our economic growth has been average at best. That’s not a trend we should accept, and it is one we cannot afford to continue. The issue at hand here is competitiveness. And competitiveness starts with our tax code. Missouri’s tax structure must evolve. 

“I’ll go one step further. I’m tired of being in the middle of the pack. I’m tired of pretending like

merely keeping pace with everyone else is good enough. Political expediency has confused survival with success. From our cities to our small towns, I hear the same message: it’s time to compete; it’s time to win. And it’s time to show the country what the Show-Me State is truly made of.”

The governor remained firm in his promise never to extend sales taxes to agriculture, healthcare or real estate, arguing Missourians can spend their own money far better than any politician.

“If we are serious about building a foundation for growth, to compete rather than be complacent, then we must begin the work now to phase out and eliminate Missouri’s individual income tax. We can do both. 

“We can maintain a balanced budget that supports essential services and pursue a tax policy that improves Missouri’s competitiveness – because this will be done deliberately. It will be done responsibly. And it will be done sustainably.”

Kehoe announced Missouri is “all in on nuclear” energy and called for establishing an Advanced Nuclear Energy Task Force to promote safe and reliable power, a declaration that even prompted some Democrats to rise in applause.

He also signed an executive order to integrate artificial intelligence (AI) into state operations safely, positioning Missouri as a leader in the modern “space race” of technology.

These forward-looking policies are complemented by a renewed focus on public safety through the Safer Missouri initiative. 

Perhaps targeting St. Louis City, the governor proposed continued funding for law enforcement recruitment and stricter reforms for juvenile crime, seeking to end the “revolving door” for repeat violent offenders, and to restore transparency to the sentencing process. 

Meanwhile, Kehoe advocated for expansion of the MOScholars program.

“Our budget recommendation this year includes an additional $10 million for the MOScholars program, for a total of $60 million, because this program is working and Missouri families are counting on it.

“Students across our state have brighter futures because their families were given educational choice. They remind us that when we put students first, opportunity follows.

“Thanks to the One Big Beautiful Bill Act and the work of our federal delegation, Missouri will opt in to the new federal scholarship tax credit program.

“Beginning in calendar year 2027, this program directs private dollars toward student scholarships, allowing Missourians to receive up to $1,700 in federal tax credits for investing in students.”

Kehoe also advocated passage of public school open enrollment to ensure no child’s future is limited by his or her zip code.

“The next step in school choice is clear: open enrollment. Open enrollment gives families the freedom to choose the public school that best meets their child’s needs, regardless of zip code. It’s about fairness. It’s about access. And it’s about making sure no child’s future is limited by their address.”

Kehoe signed an executive order creating a statewide school accountability A-F grade card.

“Missouri’s current accountability system places too much weight on administrative process rather than student success, and it does not give a straightforward picture of how schools are actually performing. 

“The real test of Missouri’s education system should be whether students are learning – whether they can read, write, and do math. Our school grade card will accomplish just that, using a familiar A-F grading scale to clearly present academic performance.”

Kehoe also called for passage of legislation allowing pregnant women facing abuse to expeditiously finalize divorce proceedings, and urged voters to pass Amendment 3 in November “because in Missouri, we value families, and we value a culture of life. That includes pregnant women and their unborn children.

“I ask the members of the General Assembly to support Rep. Williams’ efforts to allow pregnant women facing abuse to finalize divorce proceedings. This is a bipartisan, common-sense bill, and it protects vulnerable women.

“And, this year, Missourians will have the opportunity at the ballot box to vote to restore our prolife laws that protect innocent life and prohibit dangerous transgender procedures for minors. Amendment 3 reflects Missouri’s longstanding commitment to life and standing with women.

“Protecting the unborn is important to Claudia and me, and we ask Missourians to vote yes on Amendment 3.”

Photo credit: Governor Mike Kehoe (X.com)