Missouri Public Pension Exemption: What You Need to Know

Missouri offers a tax break for retirees receiving public pensions, allowing them to exclude some or all of their benefits from state income taxes. This exemption helps reduce the financial burden on retired public employees.

Qualifying Retirement Systems

Missouri’s public pension exemption applies to government retirement plans at the state, municipal, and local levels. Eligible pensions include those for state employees, teachers, public safety workers, and municipal employees.

State Plans

Retirement benefits from Missouri’s state-administered pension programs qualify for the exemption, including the Missouri State Employees’ Retirement System (MOSERS) and the Missouri Department of Transportation and Highway Patrol Employees’ Retirement System (MPERS).

MOSERS covers most state employees, including administrative staff, legislators, and judges. MPERS serves employees of the Missouri Department of Transportation and the State Highway Patrol. Both systems provide defined benefit pensions, where retirees receive a fixed monthly payment based on salary history and years of service. These pensions are funded through employer contributions, employee payroll deductions, and investment earnings. Retirees receiving benefits from these plans can exclude qualifying amounts from Missouri taxable income.

Municipal Plans

Local government employees with pensions from city or county-run retirement systems may also qualify. Examples include the Public School Retirement System of Kansas City (PSRSKC) and the St. Louis Employees’ Retirement System (SLPSERS).

Each municipal plan has its own rules for determining benefits, typically based on service length and salary. Some require employee contributions, while others are funded solely by the employer. Retired firefighters, city workers, and county employees receiving benefits from these programs can take advantage of Missouri’s pension exclusion if they meet eligibility criteria.

Teacher Plans

Educators in Missouri may qualify for the tax break if they retire under the Public School Retirement System of Missouri (PSRS) or the Public Education Employee Retirement System (PEERS).

PSRS covers certificated teachers, administrators, and other licensed education professionals, while PEERS serves non-certificated school employees such as bus drivers and custodians. These pensions are funded through contributions from employees and school districts. The amount excluded from Missouri taxable income depends on total pension income and other eligibility factors.

Public Safety Plans

Law enforcement officers, firefighters, and emergency personnel with pensions from government-sponsored retirement funds may also qualify. The Missouri Local Government Employees’ Retirement System (LAGERS) provides pensions for police officers and firefighters employed by participating local governments. Some cities, such as St. Louis, have independent retirement systems, including the Firemen’s Retirement System of St. Louis.

Public safety pensions often provide higher benefits due to the physically demanding nature of the work. Pension amounts are typically calculated based on years of service and final average salary. Retired first responders receiving benefits from these systems can exclude eligible amounts from state income tax.

Eligibility Factors

Missouri’s public pension exemption is not automatically granted. Retirees must meet conditions related to age, income, and residency.

The exemption is generally available to individuals at least 62 years old by December 31 of the tax year. However, retirees receiving Social Security disability benefits can qualify regardless of age.

Income limitations apply. In 2024, single filers with a federal adjusted gross income (AGI) of $85,000 or less and married couples filing jointly with an AGI of $100,000 or less can claim the full exemption. If income exceeds these limits, the exclusion is gradually reduced.

Only full-time Missouri residents can claim the exemption. Nonresidents, even if they receive a pension from a Missouri-based system, do not qualify. Part-year residents may be eligible for a prorated exemption based on the number of months they lived in the state.

Calculating the Exclusion

The amount of pension income that can be excluded depends on total taxable earnings and Social Security benefits. Missouri allows taxpayers to deduct Social Security benefits from state taxable income, which affects the pension exclusion.

If Social Security benefits are fully deductible, the pension exclusion may be reduced. This prevents retirees from sheltering more income than intended.

For retirees whose AGI exceeds the income threshold, the pension exclusion is reduced incrementally. The reduction is calculated by subtracting the excess income over the threshold from the maximum allowable pension exclusion. Retirees with significant investment or employment earnings may see their exclusion partially or fully phased out.

Filing Steps

To claim the exemption, retirees must file Form MO-1040, Missouri’s standard state income tax return, and complete the Public Pension Calculation Worksheet. This worksheet determines the allowable exclusion based on taxable pension income, AGI, and other Missouri-specific deductions. The final exclusion amount is then transferred to the main return.

Pension benefits must be reported as they appear on the federal 1040 but adjusted according to Missouri’s exclusion rules. Errors in reporting taxable amounts can delay processing or require an amended return. Retirees should confirm that their pension qualifies as a public pension, as private-sector and non-government plans do not receive the same tax treatment.

Documentation Requirements

Proper documentation is necessary to support a pension exclusion claim. Taxpayers must retain and submit records verifying their pension income, eligibility, and the amount being excluded.

A key document is IRS Form 1099-R, which pension providers issue annually to report distributions from retirement plans. This form details total pension income, the taxable portion, and any state withholdings. The amounts reported on the Missouri return should match those on the 1099-R to avoid discrepancies that could trigger a review by the Department of Revenue.

Proof of residency is also required, especially for those who moved to Missouri during the tax year. Acceptable documents include utility bills, driver’s license records, or lease agreements. If the exemption is claimed based on disability, supporting medical or Social Security Administration documentation may be required.

Keeping organized records ensures a smooth filing process and provides necessary evidence in case of an audit or request for additional information.