A look at how HJR 173/174 could shift where real estate transaction costs show up
No income tax. That tends to get people’s attention. But money has a way of finding its way back into the equation, just through a different door.
In real estate, the more useful question is not whether taxes go away. It is where they show up next.
Missouri is currently exploring that exact shift. Through House Joint Resolutions 173 and 174, the state is considering a path to gradually eliminate income tax. For those who want to review the actual language, you can find the full text here: Missouri HJR 173/174 Full Text
I have already had a few clients ask me about this. On the surface, it sounds simple. More money in your pocket. But real estate has a way of exposing the fine print in big ideas, because money rarely disappears. It moves.
The Shift Most People Don’t See
HJR 173 and 174 are not just about eliminating income tax. They are about replacing it. As income tax revenue decreases, the state gains more flexibility to expand sales taxes, including the possibility of applying them to a broader range of goods and services. That could include services that are not currently taxed, including areas tied to real estate transactions.
That distinction matters because Missouri already taxes many goods, while services have traditionally been treated differently. This shift opens the door to changing that, and real estate transactions rely heavily on services.
What Actually Makes Up a Real Estate Transaction
When people think about buying or selling a home, they tend to focus on the price.
But the transaction itself is a layered set of services: title work, lender fees, appraisals, inspections, surveying, legal documentation, transaction coordination, title processing, and recording and administrative work.
While not every transaction includes every item, most rely on a similar set of services to be completed properly.
Right now, many of these costs sit outside the kind of broad sales tax structure applied to goods. If that changes, even slightly, the effect shows up in one place very quickly: the closing statement.
Where the “Savings” Quietly Reappear
It is easy to think of this as money moving from one place to another, but depending on how that shift happens, some households may find there is simply less left at the end of the transaction.
If services tied to real estate begin to fall under expanded sales tax rules, the cost of transacting does not disappear. It shifts, not in a dramatic way, but in small line items such as a slightly higher appraisal cost, a tax applied to a service that was previously exempt, or incremental increases that do not stand out on their own but add up quickly.
Most buyers and sellers will not connect those changes back to state tax policy. They will simply feel that it is more expensive to move.
Why This Matters More Than It Seems
Real estate is sensitive to friction, and even modest increases in transaction costs can influence behavior. Buyers stretch less, sellers hesitate to list, investors rework their numbers, and first-time buyers feel pressure sooner.
These are not dramatic shifts. They are subtle, but subtle changes are exactly what shape a market over time.
Unlike income tax, which is spread out over the year, transaction costs hit all at once at closing, often in a moment that already feels financially tight for many households.
This Is Not About “Good” or “Bad” Policy
There are reasonable arguments on both sides of this proposal. Some will point to the appeal of eliminating income tax as a way to attract residents and simplify the system, while others will focus on how a shift toward consumption-based taxes may redistribute how costs are felt.
That debate will play out at the state level, but from a real estate perspective, the more useful question is simpler: how does this show up in the process of buying and selling a home?
Because that is where theory meets reality.
The Bottom Line for Buyers and Sellers
If Missouri moves toward a no income tax model, it does not mean the cost of housing transactions disappears. It means the structure changes.
Some of those changes will be visible on the settlement statement. What may be less obvious is why certain costs are higher or how those increases are tied to broader tax policy shifts.
Buyers and sellers who understand that shift early will be better positioned to plan for it, structure their deals accordingly, and avoid surprises at closing.
What Should Buyers and Sellers Do Right Now?
For now, this is something to watch, not react to. Nothing about how real estate transactions are structured or taxed has changed today.
Understanding how costs could shift puts buyers and sellers in a stronger position as the details become clearer. If the proposal moves forward, the impact will unfold over time, not overnight.
The advantage will go to those who are paying attention early, not scrambling to adjust later.
A Local Perspective
Policy changes like this rarely stay abstract for long. They show up in how homes are priced, how quickly they sell, and what buyers are willing to absorb. They influence how sellers position their homes and how investors evaluate risk.
That is why paying attention now matters, not because anything is certain, but because understanding how costs move is part of making better real estate decisions.
If you are trying to make sense of how changes like this could impact your plans to buy or sell, especially here in Kirkwood and the surrounding St. Louis area, that is a conversation worth having before you are sitting at a closing table.
Karen Moeller
STLKaren.com
Karen.McNeill@STLRE.com
314.678.7866
About the Author:
Karen Moeller is a St. Louis area REALTOR® with MORE, REALTORS® and a regular contributor to St. Louis Real Estate News, helping clients make informed, data-driven decisions.
