A Sales Tax On Doctor Visits And Medicine? In Missouri, Some Worry

Key TakeawaysVoters in the 'Show Me State' will weigh in next month on a proposal to replace the state's income tax with a sales taxCritics warn it would be hard to make up for the lost revenue without taxing healthcareState lawmakers would have the power to tax services like visits to the doctor, dentist or prescription drugs.FRIDAY, July 17, 2026 (HealthDay News) — Missouri healthcare advocate Leslie Ortbals and her husband want to start a family, but she worries they can’t afford it. The 27-year-old said she takes 10 medications daily to manage multiple chronic illnesses.Now she worries the cost of those drugs could rise — not because of price increases, but because of a tax system revamp put on the ballot by the state’s Republican-dominated legislature and backed by the Republican governor.Prescription drugs and doctor visits are currently exempt from taxes in the state. But in August, Missouri voters will weigh in on a proposed constitutional amendment to give the legislature the power to replace the state’s income tax with expanded sales taxes, including on goods and services currently exempt.“Politicians want Missourians to trust them when they say not to worry about our medications and healthcare being up for grabs,” Ortbals said at a June press event organized by Progress MO, a progressive advocacy group.“I have spent enough time in Jefferson City to know better,” said Ortbals, who works for a Democratic state legislator but was speaking in her personal capacity. “I have watched them speak about protecting life while making lifesaving healthcare less accessible.”Taxes on healthcare are unusual in the United States but not unprecedented. Most states already tax over-the-counter drugs. Illinois, Missouri’s neighbor, is the only state to also tax prescription drugs. Delaware, Hawaii, New Mexico and Washington all have taxes on services by physicians, dentists, out-of-hospital nursing providers and medical laboratories.Critics of the amendment to eliminate income tax in Missouri say it’d be difficult to make up the lost revenue without also imposing taxes on healthcare. Nearly two-thirds of the state’s general revenue budget comes from income taxes, about $8.7 billion in 2026. Failing to make up that revenue could lead to steep cuts in state services.The proposed tax cut comes at an already precarious time for the state budget. Missouri Gov. Mike Kehoe restricted about $440 million in spending in this year’s budget over concerns of lagging revenues. The state legislature has passed a series of tax cuts since 2022, including repealing capital gains taxes. Federal COVID aid has propped up the budget in recent years, but the state’s auditor recently warned that the surplus is dwindling. And the state is projected to lose about $14 billion in federal Medicaid funding over 10 years due to cuts from President Donald Trump’s signature One Big Beautiful Bill Act.Proponents of the Missouri income tax proposal, such as Elias Tsapelas of the Show-Me Institute, a conservative think tank, say the cut would spur economic and population growth in the state, both of which have been flat in recent years. He doubts healthcare would be among the things subject to sales tax. But even if it were, he said, it could be done in ways that wouldn’t target lower-income residents. New Jersey, for example, taxes cosmetic procedures (excluding reconstructive surgeries), which tend to be performed on wealthier people.In a statement to KFF Health News, Kehoe spokesperson Gabby Picard said the governor “will never support extending sales taxes on agriculture, healthcare or real estate,” noting that the legislature would have to decide what to exempt if the ballot measure passes.Federal law already prohibits states from imposing taxes on many healthcare services covered by government programs such as Medicare, the federal health insurance program for seniors, and Medicaid, the joint state-federal health insurance program for people with low incomes or disabilities, Picard wrote. More than a third of Americans were insured through those two programs in 2024.But Jay Hardenbrook, advocacy director for AARP Missouri, argued that raising taxes on healthcare, real estate and agriculture is the real reason for the amendment, considering the legislature doesn’t need special permission to cut income taxes. He cautioned that because the amendment opens the door to new taxes on anything, it could unleash a “weird feeding frenzy” with special-interest groups lobbying for exemptions.“Let’s say we do protect prescription drugs from a tax increase; does that mean that the cost of food goes up?” Hardenbrook said.And if the Missouri measure passes and the legislature exempts healthcare and real estate from new taxes, Hardenbrook worries about cuts to state-funded services like home and community-based care.“When I talk about taxes going up, and the price of every good and services going up, that’s the best-case scenario,” Hardenbrook said. “The worst-case scenario is that the income tax just goes away, and we just don’t have the money to do the things that we need to do.”Eight states have no income tax, and Washington taxes only capital gains, but Carl Davis of the Institute on Taxation and Economic Policy, a progressive think tank, said the way Missouri is going about its elimination is nearly unprecedented.Only Alaska has repealed a broad-based personal income tax that had previously accounted for a significant portion of the state budget, Davis said.“The situation in Alaska was they struck oil, and they had this gusher of economic activity and tax revenue that resulted from that,” Davis said. “Missouri has not struck oil.”A 2012 tax cut in Kansas that reduced income taxes for individuals and eliminated them for some types of businesses created a large budget hole, prompting lawmakers there to largely repeal the cuts five years later.Tsapelas of the Show-Me Institute said Missouri’s income tax elimination wouldn’t happen overnight but would instead be more akin to recent income tax reductions in the state: phased in and tied to revenue targets that would shield the state from massive budget gaps.“It’s not as doom and gloom as some people are worried about,” Tsapelas said.But Ortbals, the healthcare advocate, said too many Missourians are already delaying medical care because of costs.“I want a Missouri where young people can afford to stay, where families can afford to grow, where chronic illness does not become financial ruin,” Ortbals said.More informationThe National Institutes of Health has more about health care costs in the U.S.About KFF Health NewsKFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling and journalism..What This Means For YouMissouri voters should take steps to learn more about the ballot measure, and folks in other states should pay attention to how this potential tax change develops..Sign up for our weekly HealthDay newsletter

A Sales Tax On Doctor Visits And Medicine? In Missouri, Some Worry

Related Stories

Facing Funding Losses, States Call Out Big Businesses With Employees On Medicaid

Efforts To End School Vaccine Mandates Hit A Wall In Florida

Indiana Takes On Powerful Hospitals By Capping Prices They Charge Employers

Kids Keep Getting Stuck in Hospitals, Even After Being Cleared For Discharge