In July, Missouri Gov. Mike Kehoe signed legislation that will significantly impact Missouri real estate investing and practice: House Bills 594 and 595. The new laws are effective as of August 28, 2025.
House Bill 594 – Capital Gains Tax Doesn’t Count in Missouri
This bill represents a significant change to Missouri tax policy in that it effectively eliminates in Missouri the tax on capital gains (which are profits from selling certain capital assets, such as stocks or real estate) for individuals and provides a mechanism for eventually doing the same for corporations.
Under the bill, beginning January 1, 2025, an individual taxpayer may deduct from their Missouri income tax all income reported on their federal tax return as capital gains. The deduction applies to all capital gains, short or long term.
The bill also provides for corporations to do the same, but only after the top rate of Missouri individual income tax is equal to 4.5% or less and then only for the following tax year and thereafter.
House Bill 595 – Changes to Brokerage and Certain Ordinances Relating to Residential Leasing
Brokerage Agreements
This bill requires real estate brokers to enter into written agency agreements with clients before providing brokerage services. Previously, real estate brokers could enter into those agreements while they were providing such services.
Residential Real Estate – State Pre-emption of Certain Source of Income Ordinances
Much more controversially, the bill also preempts local ordinances that prohibit landlords from refusing to rent to potential tenants because their “lawful source of income to pay rent includes funding from a federal or other housing assistance program” such as Section 8 vouchers.
Several cities in Missouri have ordinances barring what has been described as “source-of-income” discrimination, but Kansas City’s ordinance, which took effect in August 2024, provided the impetus for the bill.
The Kansas City ordinance specifically eliminated a safe harbor provision that had explicitly made clear that the prohibition on “source-of-income” discrimination would not compel landlords “to participate in an otherwise voluntary benefit or subsidy program.”
Two Kansas City-area landlords subsequently filed a lawsuit in federal court. They argued that the ordinance effectively forced them to take part in the Section 8 program and was thus (1) pre-empted because federal law makes the program voluntary, and (2) an unconstitutional search and seizure because participation in the Section 8 program mandates governmental access to landlords’ premises and business records. In February, Judge Roseann A. Ketchmark granted the plaintiffs’ motion for a preliminary injunction against enforcement of the ordinance. Jones et al v. City of Kansas City Missouri, Case No. 4:24-cv-00649 (W.D. Mo.)
The signing of House Bill 595 has since rendered the lawsuit moot. Proponents of the bill have defended it as a necessary measure to protect property rights, while opponents argue that it will only worsen the problem of homelessness.
The above bills signed into law in Missouri for 2025 may be reviewed at the following links:
