People in Missouri who make money from selling things like stocks or houses might soon keep even more money, because Missouri could be the first state in the U.S. to not tax that kind of profit.

A new law agreed on Wednesday will stop the tax on profits from investments this year for people. It might also stop it for companies later if the state earns enough money. The plan to end the tax will now go to the governor, Mike Kehoe, who said he likes it a lot.

People who support the idea hope it will help the economy. But people who are against it say that ending the tax on money made from investments will mainly help rich people. They also say it will mean less tax money for schools and public services. The politicians from the Republican party got the law passed, even though the Democratic politicians didn't like it at first. This happened because they added more tax cuts for older people and people with disabilities. They also added new rules so people wouldn't have to pay sales tax on diapers and products for women's hygiene.

Missouri has a special rule for income tax. This is happening while other states are also lowering their income taxes. At the same time, the government is thinking about keeping or making bigger the tax cuts that President Trump started.

What is the tax on the money you make when you sell something?

When you sell things like stocks or property for more money than you paid, it's called a capital gain. If you own these things for more than a year before you sell them, the government takes less tax from this profit compared to your regular money.

Most states that tax income also tax the money you make from selling things like stocks.

Some states with Democratic leaders are doing the opposite. For example, in Maryland, they recently made a law to add a small tax on profits from selling things like stocks for people who earn more than $350,000. In Washington, they also made a law to add an extra small tax on profits from selling things like stocks over $1 million. Minnesota already adds an extra tax on profits from selling things like stocks and other money from investments over $1 million.

Why should we stop taxing the money people make when they sell things like houses or parts of companies?

Some people say that stopping the tax on profits from selling things is good. They think this tax stops people from investing and makes them keep their things. They would rather people sell their things and spend the money in other ways in the economy.

When you tax something, people want less of it, said an expert.

A group called ALEC has wanted to stop certain taxes for a long time. But a politician named Chad Perkins said friends from a building company gave him the idea last year. The company had to pay this tax. He also said his idea could help farmers who want to sell their land.

Republican state Senator Curtis Trent said that taxing the money made from selling things means Missouri misses chances to make money. He said it makes the economy slower and people earn less. He believes this makes Missouri less competitive in the US and other countries.

Who would get money from stopping the tax?

People who don't agree say rich people will benefit the most.

Sam Waxman, who works at a research center, said that stopping the tax on capital gains in Missouri would be a bad example for the whole country. He also said it would make money and racial differences worse.

A study showed that more white families make money from investments than some minority families.

In Missouri in 2022, about 542,000 people who pay income tax made money from selling things like stocks. This was only 20% of all people who pay taxes. A group that studies money says that if the tax on this money is stopped, most of the tax help will go to the richest 5% of people who pay taxes.

How much money do we lose if we stop the tax on profits from selling things?

People who study laws in Missouri think that if they stop a tax, the state could lose about $262 million each year later. But people who agree and people who disagree both say this number is not correct.

The Missouri Budget Project thinks the cost could be almost $600 million each year.

Trent thinks that if the tax is removed, the economy will grow more, and this will mean more money from taxes in the future.

Owen Zidar, a professor, studied how changing taxes on selling things like stocks and houses affected states. He said that when these taxes are lower, more people sell things and make money. But, the government still loses money because the tax rate is lower.

Zidar said he doesn't think that stopping the tax on profits in Missouri will bring a lot of new business and money.

He said he thought they would make much less money.