Missouri’s Capital Gains Exemption: What CRE Investors Should Do Before Year-End

BLOG // November 2025

Missouri’s Capital Gains Exemption: What CRE Investors Should Do Before Year-End

Missouri has officially eliminated state income tax on capital gains — and the change couldn’t come at a better time for commercial real-estate investors.
Signed into law in mid-2025 and retroactive to January 1, 2025, the new policy allows individuals to deduct 100 % of their capital gains from Missouri taxable income.

That means when you file 2025 taxes next spring, your state liability on qualifying gains drops from roughly 4.8 % to 0 %. For owners and investors in St. Louis commercial real estate, this creates a rare window to review transactions, reposition portfolios, and plan for 2026 with a new level of flexibility.

What Changed
• 100% exemption on capital gains for individuals (retroactive to 1/1/25).
• Applies to all federally reported gains — real estate, stocks, etc.
• Corporate exemption still pending future rate reduction (trigger ≤ 4.5 %).
• Missouri is the first income-tax state in the nation to do this.

Why It Matters for CRE Investors
This update fundamentally changes how Missouri investors approach portfolio timing and deal structure:
• Higher after-tax ROI on 2025 dispositions.
• New options for 1031-exchange strategy.
• Increased out-of-state capital eyeing St. Louis assets.
• Momentum for reinvestment heading into 2026.

“For investors in St. Louis, this isn’t just a tax break — it changes how you think about timing. Deals that might’ve been on the fence a year ago suddenly make a lot more sense.”
— John Sheahan, NAI DESCO Principal

Action Steps Before Year-End
 Review 2025 sales and potential closings — model after-tax outcomes under the exemption.
 Discuss timing of 2026 dispositions with your CPA and broker.
 Re-evaluate whether a 1031 exchange still fits your objectives.
 Identify reinvestment opportunities aligned with long-term growth sectors (industrial, flex, adaptive reuse).

Partner With NAI DESCO
At NAI DESCO, we’ve been following this legislation since it was first introduced — and helping clients prepare for its impact well before it passed.

NAI DESCO can help you model the numbers, assess timing, and position your assets to take full advantage of Missouri’s investor-friendly environment.

The law is retroactive — but your planning shouldn’t be. Let’s make sure your 2025 transactions deliver 2026-level returns.

Contact NAI DESCO to discuss your next steps!