AIM's successful 2025 Legislative Session results in bills taking effect tomorrow

By Ray McCarty, president and CEO, Associated Industries of Missouri

Governor Mike Kehoe signs HB 567 with sponsors Sen. Mike Bernskoetter and Rep. Sherri Gallick

August 27, 2025 - Associated Industries of Missouri had an extremely productive 2025 Legislative Session. This article recaps our most important successes this session that are effective tomorrow, August 28, 2025.

PAID SICK LEAVE REPEAL

HB 567 (Rep. Gallick and Sen. Bernskoetter) repeals the paid sick leave/paid domestic violence provisions passed in Proposition A in November 2024. The bill also prevents future automatic inflation increases in the minimum wage and requires public employers to abide by the minimum wage laws also. Although the bill will repeal the paid sick leave/paid domestic violence leave provisions effective tomorrow, employers must decide how to treat the leave workers accrued from the effective date of Prop A (May 1) through the repeal date (August 28). Many employers recognize that workers who have accrued the leave should be able to take any remaining leave and are just stopping future accrual of leave. Prohibiting employees from using the accrued leave may have legal consequences for the employer. We recommend you consult an attorney if you are considering prohibiting the use of this accrued leave after August 28. Many employers will be allowing the use of the leave, but will require employees to comply with their existing policies regarding the use of sick leave.

Associated Industries of Missouri will be working with our members and fellow business advocacy organizations to explore ways to mitigate a potential constitutional amendment that has already been filed and is currently in the signature-gathering stage, perhaps by finding reasonable middle ground that would allow employers to retain their current policies regarding use of leave without fear of lawsuits. More on that topic soon.

ELIMINATION OF CAPITAL GAINS TAX AND IMPLEMENTATION OF BROADBAND SALES TAX EXEMPTION CLARIFICATION

HB 594 (Rep. Perkins and Sen. Trent) provides to individual income taxpayers a deduction of capital gains from the computation of Missouri taxable income, to the extent such gains are included in the individual taxpayer's federal adjusted gross income. While the DOR has issued opinions that the deduction is not available to fiduciaries, trusts, or pass-through entities electing to pay their tax at the entity level, partners, shareholders and others deriving income from pass-through entities and reporting taxes on their individual income tax returns will be able to enjoy the deduction. The capital gains deduction for individual taxpayers is effective for tax years beginning on or after January 1, 2025, and is a 100% deduction. If the Missouri individual income tax rate is reduced to 4.5%, corporations would also be entitled to a capital gains deduction for tax years beginning on or after January 1 of the following year. Missouri is the first state with an income tax to remove tax on capital gains.

Currently, machinery and equipment used to provide telecommunications services are exempt from state and local sales and use taxes. This bill clarifies that exemption also applies to machinery and equipment used to provide broadband services. Nearly all of this equipment is already exempt, but this clarifies the exemption to prevent future misunderstandings in application of the exemption.

The bill also exempts diapers, incontinence products, and feminine protection products from state and local sales and use taxes. Previous versions of this language would have lowered the rate on such items to the same rate as food items, but the language in this bill is a complete exemption.

CLASS ACTION LAWSUIT REFORM

SB 47 (Sen. Trent and Rep. Diehl) aligns Missouri Supreme Court Rule 52.08 with the federal rule on class action certification, providing transparency and clarity in class actions rules. While this bill seems simple, it pushes Missouri closer to having common sense tort laws and helps Missouri become a friendly state for businesses. We would like to thank Senator Curtis Trent and Representative Dane Diehl for their leadership in getting this important piece of legislation across the finish line.

REGULATORY DEFERENCE TO STATE AGENCIES

SB 221 (Sen. Schroer and Rep. Keathley) aligns Missouri law with the decision by the Supreme Court of the United States (SCOTUS) in Loper Bright Enterprises v. Raimondo. That decision overturned the Supreme Court decision in Chevron v. Natural Resources Defense Council, in which the SCOTUS decided courts should defer to government agencies' interpretation of statutes they found ambiguous.

AIM supported this bill because we believe the Chevron deference provides too much flexibility to government agencies. Our laws are to be created and mandated by our elected officials in the legislature, where private citizens and industries can participate in the professional review of legislation to ensure it will be beneficial to citizens. Government agencies' role in the policy process is not to interpret but to enforce the law. These bills will ensure the true power of drafting legislation remains with the people’s General Assembly and not with unelected bureaucrats in government agencies.

ADVANCING CAREER TECH INITIATIVES

SB 150 (Sen. Carter and Rep. Kelley) created many positive changes for workforce development.This includes language that requires the Department of Higher Education and Workforce Development (DHEWD) to make available a grant to study science, technology, engineering, or mathematics (STEM) subjects for $1,500 per year, up to a maximum of $6,000, to eligible recipients. This will help incentivize individuals who obtain education in essential fields that will benefit our states and help businesses grow with exception workers.

This bill also establishes the "Career-Tech Certificate (CTC) Program" and the "Career-Tech Certificate (CTC) Program Fund" to reimburse the costs of eligible students' tuition, books, and fees to certain approved institutions, such as two-year community colleges and technical schools, that offer eligible programs of study or training programs. This will provide another incentive for individuals to colleges that will help Missouri workers advance their careers and enhance the quality of available workers for Missouri employers.

Finally, this bill creates a process for the Department of Elementary and Secondary Education to issue a temporary childcare facility license to a childcare provider to expand an existing site or to add a new location. This will help expand childcare in Missouri, allowing families in our state more opportunities to find essential childcare.

If you have any questions, please send them to Ray McCarty at rmccarty@aimo.com and please tell your fellow business leaders about Associated Industries of Missouri and the great work we do on behalf of you as we continue to serve as "The Voice of Missouri Business®" - our mission since 1919.