Missouri businesses generally pleased with 2026 Legislative Session

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

May 15, 2026 - The 2026 Legislative Session is in its final day. With about an hour left, here are a few of the issues that passed in the session's final days.

Air Pollution Control Program funding (AIM supports)

One of the top priorities of Associated Industries of Missouri (AIM) this year was providing funding to support the Missouri Department of Natural Resources Air Pollution Control Program (APCP). The APCP has been a victim of its own success. As companies do a better job of controlling pollution, the emission fees that are based on the amount of pollution are reduced. At the same time, costs to operate the program continually increase.

The AIM Environmental Committee developed a solution for the problem that was passed by the legislature yesterday in SB 1033 (Sen. Bean and Rep. Wellenkamp) and again today in SB 953 (Sen. Bean and Rep. Wellenkamp). The bills earmark a small percentage of sales taxes already remitted to the state by utility companies for the program and stops the practice of "sweeping" balances in the funds supporting the program. "Sweeping" is the practice of transferring unused balances at the end of a fiscal year into the General Revenue Fund. Of course, this makes no sense if the program is approaching insolvency. The bills produce the amount the MDNR predicts will be needed to keep the program funded. Increases in permit fees that are currently in process will be stopped before they are implemented, as long as one of the bills is signed by Governor Mike Kehoe.

Sovereign Immunity (AIM supports)

Currently, sovereign immunity provides that public entities are immune from liability for compensatory damages resulting from negligence, except as expressly waived in law. SB 916 (Sen. Burger and Rep. Parker) extends that immunity on a limited basis to contractors performing work for the Missouri Department of Transportation for claims arising from the design, condition, or maintenance of a Department project. The protection covers a private contractor, subcontractor, engineer, or employees thereof, when the damages occur after execution of a contract to perform work but prior to the commencement of construction activities on the project site and when construction activities on the project site are approved and accepted by the Department. The bill was passed by the General Assembly yesterday and goes to Governor Mike Kehoe for his signature.

Sovereign Wealth Fund

SJR 95 (Sen. Schnelting, Rep. Wellenkamp) presents an alternative to the dramatic changes that would be required if Governor Kehoe's plan to replace income tax with sales and use taxes (HJR 173) is approved by voters. SJR 95 asks voters if they approve of establishing a "Show Me Prosperity Fund" that would eventually be used to eliminate state-imposed taxes. The Fund could receive money appropriated to it by the General Assembly or gifts, donations, etc. from private sources. The Fund would be invested by the State Treasurer in exchange-traded funds and interest would compound within the Fund until the balance is sufficient to eliminate the taxes. The resolution will be presented to voters for approval.

Sales and use tax rounding

HB 2819 (Rep. Shields, Sen. David Gregory) addresses a problem for retailers that was caused by the penny shortage. The bill says retailers may round cash transactions up or down to the nearest five cents. If a customer uses a credit card, the bill does not apply. The bill will be presented to the Governor for approval or disapproval.

Economic Development

HB 3231 (Rep. Christ, Sen. Kurtis Gregory) is an omnibus economic development bill that allows cities to establish innovation districts and innovation zones, using incremental tax revenue to fund public safety and infrastructure improvements within the district. The bill establishes a "Missouri Opportunity Zone" investment mechanism within innovation districts allowing taxpayers to defer

Missouri income tax liability if the amount of the tax liability is invested in a qualifying investment within the district. If the investment is held for at least 10 years, gain recognized upon disposition of the investment is excluded from Missouri taxable income. The bill contains many incentive programs, including an angel investment credit to incentivize investments in Missouri startup companies. The provisions of the bill will be managed by the Department of Economic Development and the Missouri Technology Corporation. The bill will go to Governor Kehoe for approval.

SB 1553 (Sen. Kurtis Gregory, Rep. Casteel), creates AIM-supported incentives for producing critical materials and pharmaceuticals that will help boost domestic production of key chemicals and drugs. The bill clarifies purchases used to make the chemicals and drugs are included in the manufacturing exemption that already exists, provides tax credits for companies investing more than $5 million, and allows grants of up to $500,000 for qualified project costs. The bill's provisions would expire December 31, 2036. The bill will now go to Governor Kehoe for approval.

We will compile a more comprehensive list of bills passed by the legislature in a future update. This was a very productive session for Missouri businesses and we applaud the legislators who helped advance a pro-business, pro-jobs agenda this session.