Tax in Missouri: a complete guide
Are you thinking about moving to Missouri? Every state’s tax system is unique, and Missouri is no exception. Here’s a complete overview of Missouri’s approach to income tax, property taxes, sales tax and more.
Missouri income tax
Like many other states, Missouri levies its own state income tax in addition to the federal income tax all US residents have to pay.
Income tax in Missouri has recently come down, with Missourians voting to lower the top income tax rate from six percent to 5.45 percent in 2014, the first time this tax has been reduced in almost a century.
All filers – joint, single, and head of household – pay the same income tax rates in Missouri, though the amount you pay depends on your taxable income, just like federal income tax.
The top income tax bracket has such a low threshold that many Missourians are classed high earners.
Here are Missouri’s income tax brackets:
|State income tax amount
Missouri’s income tax doesn’t apply to your gross income but to your taxable income. This is your federal adjusted gross income (AGI) with state-specific deductions.
Missouri’s big cities – St. Louis and Kansas State – are the only two cities in Missouri to impose their own income tax. You must pay an additional one percent earnings tax if you’re a resident or work in either city.
Missouri sales tax
Sales taxes are another way many states raise revenue to fund local services, and Missouri imposes a statewide sales tax of 4.225 percent on many goods and services.
Missouri’s sales tax of around four percent is close to the national average, but due to local authorities levying further sales taxes in addition to the state sales tax, some Missourians pay very high sales taxes. Across Missouri’s 114 counties, the rate of sales tax varies dramatically.
What does that mean in practice? Well, take Barton County, for example. In Barton County, the county adds four percent sales tax rates to Missouri’s 4.225 percent. That means goods in Barton County have a combined sales tax of 8.225 percent.
Some Missourian counties and cities have combined sales taxes up to 12 percent.
Sounding costly? The state also has some tax-cutting initiatives for residents to help lower their tax burden.
Missouri has two annual sales tax holidays, during which the state sales tax does not apply.
This includes a back-to-school tax holiday, which usually takes place over the first weekend of August and gives families tax exemptions on clothing and other school supplies. Show Me Green is the other sales tax holiday in April, where Energy Star appliances are free of sales tax.
The state tax on groceries is lower than other goods, which can help residents keep their living expenses down. Groceries are subject to a sales tax of just 1.225 percent.
Missouri also has some of the lowest alcohol taxes in the country.
The Missouri beer tax is $0.06 per gallon
The Missouri liquor tax is $2.00 per gallon
The Missouri wine tax is $0.42 per gallon
Missouri property tax
Property owners in Missouri must pay tax on each property relative to its value. Like other taxes in Missouri, this varies across more than 100 counties.
Missouri's average property tax rate is 0.88 percent, below the US national average of 0.99 percent and the 14th lowest state average in the country. Some counties will have an even lower average property tax, whereas others are higher.
There is a discount on property taxes available to seniors and disabled people, too.
Missouri motor tax
Missouri is home to one of the lowest gas taxes in the country. Motorists will pay 22 cents per gallon on gasoline and diesel fuel.
However, there is a plan in place for Missouri’s gas tax to rise incrementally over the next few years to raise revenue for new roads and infrastructure.
According to AP News, Missouri’s government will raise the gas tax by 2.5 cents a year until the tax becomes 29.5 cents per gallon in July 2025.
Missouri estate tax
Financial planning for when you’re no longer around is a necessary task. The state of Missouri makes one aspect of that easier for families as the state has no estate tax.
Only 12 US states impose an estate tax on their residents. But, if you inherit an estate from a Missourian, you may need to check tax regulations where you live, as you might be liable for fees.
Missouri retirement tax
Missouri’s tax system impacts senior citizens, but lower-income retirees are given some relief.
Retirement income, such as from a 401(k) or other retirement savings accounts, is taxed using the same state income taxes that apply to regular income.
However, there are some deductions available. Any retirement income from Social Security is tax exempted if the recipient is a single filer earning less than $85,000 a year or joint filers earning less than $100,000.
Public pension income is also significantly deductible.
Seniors in Missouri may be eligible for a form of property tax relief called the Missouri property tax credit, allowing up to $1,100 for property owners and $750 for renters. To be eligible for Missouri property tax credit, you must be:
Owning and occupying your home (the rules for part-year owners are slightly different)
Earning less than $30,000 per year if you’re a single filer
Earning less than $34,000 per year if you’re a joint filer
The credit equals a maximum of $1,100 for owners and $750 for renters.
If you’re considering retiring to Missouri, speaking to a financial advisor could help you make the most of your hard-earned retirement savings.
For further tax guidance and to ensure you’re not paying more tax than you need to, it’s wise to speak to an expert. A financial advisor can help you handle all your tax queries and ensure you’re not paying more tax than needed.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.