How to Calculate Missouri's Capital Gains Tax

By Motley Fool Staff – Updated Apr 30, 2025 at 3:21PM

Key Points

Short-term federal tax matches ordinary rates; long-term capped at 15-20% for most brackets.
Missouri taxes all capital gains at regular income rates, up to 6% above $9,000.
Consider holding investments longer to potentially reduce total capital gains tax.
Investor Alert: Our 10 best stocks to buy right now ›

Key findings are powered by ChatGPT and based solely off the content from this article. Findings are reviewed by our editorial team. The author and editors take ultimate responsibility for the content.

When you sell an investment for more than you paid for it, then you typically have to pay capital gains tax on your profit. Federal tax law on capital gains applies to all U.S. taxpayers, but in Missouri, you'll also have to pay state tax on your capital gains, and the way the two systems work is somewhat different. Let's look more closely at the differences and how they affect Missouri taxpayers.

Image source: Getty Images.

Federal capital gains tax

Capital gains are taxed in two different ways for federal tax purposes, depending on how long you held the investment. If you owned your investment for a year or less, then you'll pay short-term capital gains tax at rates equal to your ordinary income tax rate.

On the other hand, if you owned your investment for longer than a year, then long-term capital gains tax rates apply. For those in the lowest two federal tax brackets, no capital gains tax is imposed on long-term gains. A 15% maximum applies to those in the 25% federal bracket or higher, except for those in the highest 39.6% federal bracket who pay a 20% maximum for long-term capital gains.

This preference for long-term capital gains has the impact of encouraging long-term investors. Those who trade frequently are penalized with higher rates.

Missouri capital gains tax

Capital gains are taxed for Missouri state income tax purposes in a much simpler manner. Missouri doesn't recognize any difference between long-term and short-term capital gains, and it doesn't have preferential rates tied to how long you hold onto an investment. Instead, all gains are taxed at whatever rate you'd pay on the rest of your income.

Missouri has a progressive tax system, but the brackets are extremely small. Even though Missouri has 10 tax brackets that start at just 1.5%, taxpayers pay a 6% tax rate on any Missouri taxable income above $9,000. For many investors, that means Missouri adds a 6% tax burden to whatever is paid federally, and so calculating the tax just involves multiplying your profit on your investment by 6%.

Dividend tax rates in 2024 and 2025

Here are the factors that determine how much you owe on dividends as well as a look at tax rates.

Selling Stock: Are There Tax Penalties on Capital Gains?

Selling stock can mean capital gains tax. What is it, and how do you minimize it?

How Is Cryptocurrency Taxed? (2025 IRS Rules)

This guide will explain everything you need to know about taxes on crypto trading and income.

The Best States to Retire for Taxes

This article breaks down the 10 states that offer the best mix of retirement taxes.

Be careful

Because of the combined liability from federal and state capital gains taxes, you should always think twice before choosing to sell an investment. Tax considerations alone shouldn't lead you to hold onto an investment that you want to sell for legitimate reasons, but if you think your investment still has good long-term prospects, it can be smart to not to sell and, therefore, to avoid having to pay any capital gains taxes at all.