Exempts the retail sale of food from state sales and use tax and phases out local sales and use tax on the retail sale of food over four years
The implementation of HB345 is expected to have substantial effects on both state revenue and local government funding. By removing state sales tax on food sales and reducing local sales tax over a designated period, the bill may alter the budget allocations for local services, such as education and public safety, which are often supported by local tax revenues. The gradual reduction of local food sales taxes starting January 1, 2026, will further challenge municipalities to manage their budgets effectively while meeting the needs of their communities.
House Bill 345 proposes to exempt retail sales of food from state sales and use tax and to phase out local sales and use tax on the retail sale of food over four years. The bill presents a significant shift in the state's approach to food taxation, aiming to alleviate financial burdens for consumers and businesses involved in the sale of food. Starting August 28, 2025, the bill stipulates that no state sales or use tax will be levied on retail sales of food, thus impacting how food-related businesses operate within Missouri.
The bill has raised various concerns among legislators regarding its potential consequences on local governance and revenue. Proponents argue that eliminating the sales tax on food will make essential food items more affordable for residents, particularly benefiting lower-income individuals and families. However, opponents warn that this could lead to significant funding shortfalls for local services, as municipalities heavily rely on sales tax revenue. This dichotomy illustrates the ongoing debate regarding taxation, local control, and the responsibilities of state versus local governments.