How to Calculate Sales Tax in Missouri

Sales tax in Missouri is a consumption tax applied to the retail sale of goods and certain services. This tax funds various state and local government services and public infrastructure. Businesses operating within the state are responsible for collecting this tax from customers at the point of sale. Understanding Missouri sales tax is important for businesses to ensure compliance.

Missouri Sales Tax Rates

Missouri’s sales tax structure combines a statewide rate with various local rates. The statewide sales tax rate is 4.225%, consistent across all jurisdictions.

Beyond the state rate, counties, cities, and special taxing districts can impose their own local sales taxes. These local rates vary, ranging from 0% to 5.875% in some areas. The combined state and local sales tax rate can reach up to 12.238% in specific localities. Businesses must determine the exact combined rate for their sales location, often using tools from the Missouri Department of Revenue.

Determining Taxable Sales

Missouri sales tax primarily applies to the retail sale of tangible personal property. This includes physical goods like clothing, furniture, home appliances, and non-prescription drugs. Certain services, such as telecommunications, are also subject to sales tax.

Not all sales are taxable. Sales of tangible personal property for resale are generally exempt, provided the subsequent sale is taxable or for resale. Groceries, defined as food for home consumption, have a reduced state sales tax rate of 1.225%, though local taxes may still apply. Other exemptions include prescription drugs, medical devices, and machinery or materials used for agriculture or manufacturing.

The Sales Tax Calculation Process

Calculating sales tax involves applying the combined state and local tax rate to the taxable sales amount. First, identify the correct total sales tax rate for the transaction location, converting this percentage into a decimal. For instance, a 7.225% combined rate becomes 0.07225. Next, multiply the taxable sales amount by this decimal rate to determine the sales tax due.

For example, a $100 taxable item with a 7.225% combined sales tax rate would incur $7.23 in sales tax ($100 multiplied by 0.07225, rounded). The customer pays the original price plus the calculated sales tax, totaling $107.23. For discounts, sales tax is calculated on the price after discounts. If a sale involves multiple items, tax applies to the total taxable amount before rounding.

Reporting and Remitting Sales Tax

Once sales tax is collected, businesses are responsible for reporting and remitting these funds to the Missouri Department of Revenue. Reporting frequency (monthly, quarterly, or annually) depends on the amount of state sales tax collected. For example, businesses collecting $500 or more in state tax per month typically file monthly, with returns due by the 20th of the following month.

Businesses can file and remit sales tax electronically through the MyTax Missouri portal, the preferred method for larger filers. Returns can also be filed by mail using Form 53-1, though this may result in slower processing. Even if no sales tax was collected, a “zero return” must still be filed to maintain compliance. Missouri offers a 2% timely payment allowance for sales tax returns filed and paid by the due date.