What Is Tax in Missouri? Income, Sales, & Property Taxes

Taxes are financial contributions levied by governments on individuals and businesses to fund public services and infrastructure. These revenues support a wide array of government functions, ranging from education and public safety to roads and healthcare. Taxation systems are designed to collect funds equitably from various sources, ensuring the continuous operation of essential public programs.

Missouri Individual Income Tax

Individual income tax in Missouri is imposed on earnings, operating under a progressive rate structure. This means that as an individual’s taxable income increases, higher portions of that income are subject to progressively higher tax rates. For the 2024 tax year, Missouri’s individual income tax rates range from 2 percent to 4.8 percent. Residents and non-residents earning income from Missouri sources are required to file and pay this tax.

Taxpayers can reduce their taxable income through various deductions and credits. For instance, the standard deduction for 2024 is $14,600 for individual filers, $29,200 for joint filers, and $21,900 for heads of household. Additional deductions are available for taxpayers who are over 65 or blind, such as $1,550 for married filing jointly or separately, and $1,950 for single or head of household filers. Missouri also offers a Working Family Credit, which is 20% of the federal Earned Income Tax Credit (EITC), providing a refundable credit for eligible taxpayers.

Some municipalities within Missouri also impose their own local income taxes. For example, residents and individuals working in St. Louis and Kansas City are subject to an additional 1 percent earnings tax. The Missouri Department of Revenue administers the state’s income tax laws and processes returns, which are due by April 15th of the following year.

Missouri Sales and Use Tax

Missouri levies a sales tax on the retail sale of tangible personal property and certain services. The state sales tax rate is 4.225 percent. Cities, counties, and special taxing districts can impose additional local sales taxes. Consequently, the total sales tax rate can vary significantly, ranging from the state rate of 4.225% up to approximately 10.1% depending on the specific location of the transaction.

A “use tax” complements the sales tax, applying to purchases made outside Missouri for storage, use, or consumption within the state. The state use tax rate is also 4.225 percent, and local use taxes may also apply, mirroring local sales tax rates. This tax ensures that purchases from out-of-state vendors are taxed similarly to in-state purchases. If an out-of-state seller does not collect use tax, the purchaser is responsible for remitting it directly to the Missouri Department of Revenue.

Most tangible personal property is subject to sales tax unless specifically exempted by law. Common exemptions include unprepared grocery food items, which are taxed at a reduced state rate of 1.225% rather than the full 4.225%. Prescription drugs, insulin, certain medical devices like prosthetics and hearing aids, and some over-the-counter medications purchased by individuals with disabilities are also exempt. Services are generally not taxable unless they involve the sale or creation of a tangible product.

Missouri Property Tax

Property tax in Missouri is primarily a local tax, levied by county and other local governments rather than the state. These taxes are a significant source of funding for local services, including public schools, fire departments, libraries, and other community infrastructure. Property taxes are assessed on both real estate and personal property, such as motor vehicles and other tangible assets.

The assessment process involves determining the market value of the property. For real property, this value is established as of January 1 of odd-numbered years, with the same value used for the subsequent even-numbered year unless physical changes occur. Personal property is assessed annually as of January 1. Once the market value is determined, an assessment rate is applied to calculate the assessed value: 19% for residential real estate and 33 1/3% for personal property.

The property tax bill is calculated by dividing the assessed value by 100 and then multiplying it by the total local tax rate. Tax rates vary widely by local jurisdiction, reflecting the different funding needs of counties, cities, school districts, and other special districts. Property tax payments are due by December 31st each year.

Other Missouri Taxes

Beyond the primary income, sales, and property taxes, Missouri’s tax system includes several other specialized levies. Corporations operating within the state are subject to a corporate income tax. In 2023, the corporate income tax rate was 4% of Missouri taxable income, with potential reductions to 3.75% in 2024 and further to 2.25% in subsequent years if specific revenue collection targets are met. Some pass-through entities may also elect to pay a pass-through entity tax at a rate of 5.3%.

Motor vehicle owners encounter several taxes and fees. When purchasing a vehicle, a state sales tax of 4.225% and applicable local sales taxes are imposed on the purchase price. Vehicle owners pay annual registration fees, which are determined by factors such as the vehicle’s taxable horsepower or weight. Missouri also imposes an annual personal property tax on vehicles, calculated based on their assessed value and local tax rates.

Various excise taxes are levied on specific goods and services, including motor fuels, tobacco, and alcoholic beverages. For example, the state excise tax on cigarettes is $0.17 per pack of 20. Alcohol excise taxes are applied per gallon, with rates such as $2.00 for liquor, $0.42 for wine, and $0.06 for beer. These excise taxes are included in the product’s price.