Missouri State Tax: An Overview

Missouri state tax is a necessary requirement for both residents and non-residents who earn income in the state. The state has several different taxes, including income tax, sales tax, and property tax, among others. In this article, we will take a detailed look at each one of these taxes, how they work, their rates, and any other important information related to Missouri state tax.

Income Tax

Missouri state income tax is one of the primary sources of revenue for the state, comprising approximately 40% of the state’s general fund revenue. Missouri’s income tax is progressive, which means that it is based on the taxpayer’s level of income, with higher earners paying more in taxes. Missouri’s income tax is split into nine different tax brackets, with rates ranging from 1.5% to 5.4%.

For single filers, the following tax rates apply to taxable income:

– 1.5% on the first $1,073 of taxable income
– 2.0% on taxable income between $1,073 and $2,146
– 2.5% on taxable income between $2,146 and $3,219
– 3.0% on taxable income between $3,219 and $4,292
– 3.5% on taxable income between $4,292 and $5,365
– 4.0% on taxable income between $5,365 and $8,048
– 4.5% on taxable income between $8,048 and $10,731
– 5.0% on taxable income between $10,731 and $13,414
– 5.4% on taxable income over $13,414

For married couples filing jointly, the income tax brackets are doubled. For example, the 1.5% tax rate applies to the first $2,146 of taxable income.

Missouri taxpayers can claim standard deductions or itemized deductions. The standard deduction for single filers is $12,200, and for joint filers, it is $24,400. Some of the most common itemized deductions include mortgage interest, charitable donations, and medical expenses.

In addition to the state income tax, Missouri residents are also required to pay federal income tax. The IRS has different tax brackets, rates, and deductions than the state, so taxpayers must carefully evaluate both when determining their overall tax liability.

Sales Tax

Missouri’s statewide sales tax rate is 4.225%, which is relatively low compared to other states. However, individual counties and municipalities in Missouri can levy their sales tax, which can push the total sales tax rate much higher. In cities like Kansas City and St. Louis, the total sales tax rate can be as high as 10.6%.

A few items are exempt from Missouri’s sales tax, including prescription medication, groceries, and certain goods purchased for resale. In addition, Missouri has a “”use tax”” that applies to goods or products purchased outside of Missouri that would typically be subject to Missouri’s sales tax. For example, if a Missouri resident purchases an item online from a seller based in California, the resident would likely owe Missouri’s use tax.

Property Tax

Missouri’s property tax is calculated based on the property’s assessed value, which is a percentage of the property’s fair market value. Property tax rates vary depending on the local government’s budget and revenue needs, as well as the value of the property.

On average, Missouri residents pay 0.92% of their property’s assessed value in property taxes, which is slightly higher than the national average of 0.78%. That said, property tax rates can vary widely depending on the county and municipality in which the property is located. For example, St. Louis County has an average property tax rate of 2.03%, while the average property tax rate in Christian County is just 0.66%.

Missouri residents can claim a property tax credit if their income is below a certain threshold and their property tax liability exceeds a certain percentage of their income. The maximum credit amount is $1,100 for homeowners and $750 for renters.

Other Taxes

In addition to the state income tax, sales tax, and property tax, Missouri levies several other taxes, including:

– Corporate Income Tax: Missouri’s corporate income tax rate is 6.25%, with an additional 5.0% tax on net corporate earnings over $100,000. According to the Missouri Department of Revenue, approximately 60,000 corporations pay Missouri’s corporate income tax.
– Motor Fuel Tax: Missouri’s motor fuel tax is 17 cents per gallon, which is the 21st lowest in the country. This tax is used to support Missouri’s transportation infrastructure, including roads, bridges, and public transportation.
– Tobacco Tax: Missouri’s tobacco tax is relatively low, at just 17 cents per pack of cigarettes. However, this tax generates significant revenue for the state, as Missouri is the fourth-largest tobacco producer in the country.
– Gaming Tax: Missouri has several casinos that generate significant revenue for the state. Missouri levies a 21% tax on casinos’ gross revenue, which is used to fund education-related expenses.

Conclusion

Missouri’s state tax system is relatively straightforward, with several different taxes that generate revenue for the state and local governments. Missouri’s income tax is progressive, with rates ranging from 1.5% to 5.4%, and taxpayers can claim standard or itemized deductions. Missouri’s statewide sales tax rate is 4.225%, with additional sales tax levied by individual counties and municipalities. Missouri’s property tax is calculated based on the property’s assessed value and varies significantly depending on where the property is located. Finally, Missouri levies several other taxes, including corporate income tax, motor fuel tax, tobacco tax, and gaming tax. Overall, understanding Missouri’s tax system is crucial for residents and non-residents alike, as it can significantly impact their overall tax liability.

Income taxes in Missouri, when accounting for state and local taxes, total 9%, which is slightly below the national average of 9.8%.  Like other states, there are excise taxes of liquor, beer and cigarettes, as well as vehicle taxes.  There are also property taxes that must be given consideration.  Tax returns are due on April 15.

Missouri state sales tax – 4.225%, (prescription drugs exempt, food taxed at 1.225%).  This is in addition to local sales taxes that can be tacked on, which can make the sales tax as high as 6%.  Use taxes may be applicable for purchases made out of state for use in Mississippi.  Sales tax burden is much lower than the national average

Missouri personal income tax

There are ten tax brackets:

– 1.5 percent on the first $1,000 of taxable income.

– 2 percent on taxable income between $1,001 and $2,000.

– 2.5 percent on taxable income between $2,001 and $3,000.

– 3 percent on taxable income between $3,001 and $4,000.

– 3.5 percent on taxable income between $4,001 and $5,000.

– 4 percent on taxable income of $5,001 and $6,000.

– 4.5 percent on taxable income of $6,001 and $7,000.

– 5 percent on taxable income of $7,001 and $8,000.

– 5.5 percent on taxable income of $8,001 and $9,000.

– 6 percent on taxable income of $9,001 and above.

Most Missouri residents will pay the 6% tax rate.  This is a median tax burden compared to the national average.

Missouri excise taxes

Taxes will be assessed on vehicles, alcohol, tobacco, gasoline and are in addition to federal excise taxes.

– $.17 per package of 20 cigarettes

– $2.00/gallon on spirits

– $.42 per gallon on table wine

– $.06 per gallon of beer

– $.173/gallon on gasoline

Missouri inheritance tax

Only federal laws are in effect.  Estate laws have not been enforceable on deaths occurring after Jan 1, 2005.  There is no Missouri inheritance tax.

Missouri payroll taxes

State Disability Insurance – none

State Unemployment Insurance – 0% to 9.70%, wage base is $13,000.  New employer contribution, including mining employers, is 3.51%.  Construction employers use 3.619%.  Non-profits use 1.3%

State minimum wage is 7.25/hr

Missouri state property tax

Missouri local government is funded through property tax.  Tax assessments are made by these local governments and the tax is determined by this value and the tax rate determined by the locality.

Missouri state corporate tax

There is a flat tax of 6.25% on all corporate income.  This, like Missouri income taxes, is comparable with average state corporate tax rates.

Exemptions

Schools, churches, cemeteries, and non-profits are all exempt from state and local property taxes.

There are personal exemptions from taxation that total $2,100 for individuals and $4,200 for couples.  Dependents are subject to a $1,200 exemption.  Those 65 and older or blind receive a $1,000 exemption.  You may make deductions for federal taxes paid.  This deduction does not exceed $5,000.

All couples with a gross income under $100,000 or individuals with an income under $85,000 may deduct up to 65% of retirements benefits.  Eventually pensions and other benefits will be 100% deductible by 2012.
15% of military pension income is exempt from Missouri state tax.  All military pensions will be tax free by Jan 1, 2016.