Who Pays the St. Louis City Earnings Tax?

The St. Louis City Earnings Tax is a one-percent levy on certain earned income that funds public services like the police and fire departments, street maintenance, and parks. The revenue from this tax supports city operations for those who live and work within its boundaries.

Individuals Subject to the Tax

Residents of St. Louis City

Individuals with a permanent address in St. Louis are subject to the one-percent earnings tax on their total gross income, regardless of where it is earned. For example, a city resident who works in St. Louis County or remotely for an out-of-state business must still pay the tax on all their earnings.

This rule applies to various living situations, including college students who maintain a permanent address in the city. If a person moves into or out of the city during a tax year, their liability is prorated for the income earned while they were a resident. City residents may be eligible for a tax credit for income taxes paid to other states, which can offset their St.louis earnings tax liability.

Non-Residents

Non-residents of St. Louis City are also subject to the earnings tax, but only on income from work performed within the city’s physical boundaries. A Missouri Court of Appeals decision affirmed that the tax applies based on the physical location where services are provided. This means if a non-resident works from home outside the city, that income is not subject to the tax.

For instance, an individual living in a neighboring county who commutes to an office in downtown St. Louis pays the tax only on wages earned for the days they are physically present at the city office. Any days worked from their home outside the city are not taxable, and a refund can be requested for those days.

Businesses Subject to the Tax

Business entities, including corporations and partnerships, are required to pay the one-percent earnings tax on their net profits. This tax is levied on profits generated from business activities and operations conducted within the City of St. Louis. The calculation of taxable profits is based on the portion of the business’s work attributable to its presence inside the city limits.

This tax on business profits is a separate obligation from the tax employees pay on their wages. The business is the taxpayer for its net profits, while employees are responsible for the tax on their own compensation.

Taxable vs. Non-Taxable Income

The St. Louis Earnings Tax applies specifically to “earned” income. Taxable income sources include:

• Wages, salaries, commissions, and tips
• Other compensation for services rendered
• Net profits from a business or self-employment
• Severance pay
• Distributions for annual or sick leave upon termination

Conversely, the tax does not apply to income that is not directly earned. Non-taxable income sources include:

• Social Security benefits
• Pension payments and other retirement income
• Interest from savings accounts
• Dividends from stock investments
• Capital gains from the sale of assets

Payment and Filing Obligations

For most employees, the earnings tax is handled automatically through payroll withholding. Employers in the city, or those who employ city residents, deduct the one-percent tax from paychecks and remit it to the Collector of Revenue.

Businesses and self-employed individuals must make quarterly estimated payments, which are due at the end of April, July, October, and January. All individuals and businesses subject to the tax must file an annual earnings tax return with the St. Louis Collector of Revenue. The filing deadline for individuals is April 15th.

This annual return, Form E-1 for individuals, reconciles the total tax liability with the amount paid during the year. Non-residents use this process to request a refund for days worked outside the city by submitting Form E-1R along with employer verification.