The possibility of Missouri eliminating its grocery sales tax in 2025 has garnered significant attention. With rising food costs and increasing economic challenges, many Missourians are looking for relief.
The idea of cutting grocery sales tax is not new, but will 2025 finally be the year this long-debated policy change is enacted?
Understanding Missouri’s Grocery Sales Tax
Missouri is among the 10 states that impose a statewide sales tax on groceries. The base state tax is 1.225%, but local governments often add their own taxes, leading to rates as high as 8% in some areas.
In fiscal year 2024, the state collected over $1 billion from grocery sales taxes, much of which funds education and conservation programs.
For years, bipartisan efforts to reduce or eliminate the tax have stalled due to budgetary concerns and disagreements over how to offset lost revenue.
Why Now? The Push for 2025
Several factors make 2025 a pivotal year for reconsidering Missouri’s grocery sales tax:
- Rising Food Costs
Food prices have surged by 25% between 2019 and 2023, with specific categories like meat, poultry, fish, and eggs seeing even steeper increases. As a result, food insecurity has risen across the state. - Regional Trends
Neighboring states like Kansas and Illinois have already reduced or eliminated their grocery sales taxes. Missouri risks falling behind in terms of affordability for its residents. - Public Support
According to a February 2024 poll by St. Louis University/YouGov, 81% of Missouri voters support eliminating the state sales tax on groceries, while 72% support eliminating local grocery taxes.
Impact on Missouri Residents
Food Insecurity and Poverty
Missouri has one of the highest rates of food insecurity in the country, with 15% of residents, or nearly 1 million people, struggling to access adequate food.
The burden of grocery sales tax disproportionately affects low-income families, who spend a larger percentage of their income on food.
Regressive Nature of the Tax
Sales taxes on essentials like groceries are considered regressive. A 2017 study revealed that low-income families spend almost twice as much of their income on food compared to high-income families. Eliminating the tax would ease financial pressures on these households.
Challenges to Eliminating the Tax
While eliminating the grocery sales tax could benefit millions, it presents significant challenges:
- Revenue Loss
The $1 billion generated annually is vital for funding state programs, including education and conservation. Local governments, which rely heavily on sales tax revenue, face potential losses of $5 million annually or more in cities like Manchester. - Balancing Local Budgets
Cities that depend on sales tax revenue for essential services like policing and road maintenance fear severe budget shortfalls. Policymakers must consider how to compensate for these losses without compromising services. - Legislative Priorities
Republican lawmakers controlling the General Assembly are exploring other tax reforms, including eliminating taxes on items like diapers and period products. These priorities could compete with efforts to abolish the grocery sales tax.
Potential Solutions
To address the challenges, lawmakers have proposed various strategies:
- Gradual Reduction: Slowly phasing out the grocery tax over several years to minimize immediate revenue shocks.
- Offsetting Revenue Loss: Introducing taxes on luxury items, such as yachts or foreign-owned farmland, to balance the budget.
- Increased Federal Assistance: Improving participation in federal aid programs like SNAP (Supplemental Nutrition Assistance Program). Currently, about one-third of eligible Missourians do not utilize SNAP benefits, leaving significant federal dollars unclaimed.
A Look at Regional and National Trends
Missouri is not alone in this debate. Several states have recently reformed their grocery sales tax policies:
State | Action Taken | Implementation Year |
---|---|---|
Kansas | Eliminated state grocery tax | 2024 |
Illinois | Plans to eliminate grocery tax | 2025 |
Virginia | Reduced state grocery tax | 2023 |
Missouri lawmakers are under increasing pressure to follow suit to maintain regional competitiveness.
What’s Next for Missouri?
Legislators are gearing up for the spring 2025 session with several bills already filed to address the grocery tax. While bipartisan support exists, questions remain about how to manage lost revenue and ensure local governments can continue to provide essential services.
Eliminating Missouri’s grocery sales tax in 2025 could provide much-needed relief to millions of residents, particularly low-income families struggling with rising food costs.
However, the path forward is complex, requiring careful consideration of revenue replacement strategies and the impact on local governments.
As lawmakers debate, public support for the change continues to grow, signaling that Missouri might finally join the ranks of states prioritizing affordability and food security. Stay tuned as 2025 could mark a significant shift in the state’s approach to taxation and social equity.