Tax Information

A stable tax structure is important for your business and your employees. Missouri has consistently proven to be one of the most tax-friendly states in the United States for both individuals and corporations.

Corporate Income Tax
In most cases, a company located in Missouri will have a lower corporate tax bill than in other states. State law sets the corporate income tax rate at 6.25% of net taxable income earned by a business in Missouri. In addition, Missouri allows 50% of federal income tax payments to be deducted before computing taxable income. Using this deduction, a corporation with a taxable income of $1,000,000 would have a Missouri effective tax rate of only 5.2%. This is 7th-lowest in the nation.

Taxable Income
An important tax advantage for Missouri businesses is the amount of income considered taxable -- only income earned in Missouri is taxed. Two allocation options are offered for calculating this income: (1) the three-factor formula, based on sales, property and payroll, or (2) the single-factor formula, based only on sales. Missouri is the only state that permits companies to choose the formula that results in the lesser corporate income tax liability. This means that companies are not penalized for locating property and jobs in Missouri as they are in the other states. In addition, it is important to note that Missouri has not adopted worldwide or nationwide unitary tax assessment in computing multinational corporate income tax liability.

Sales/Use Tax
The 4.225 percent state sales/use tax rate in Missouri is lower than the rates in 35 other states. Missouri communities have the option of adopting a local sales tax, generally ranging from one-half to one percent. Counties may also adopt a sales tax generally ranging from one-fourth to one percent.

Use tax is similar to sales tax, but is imposed when tangible personal property comes into the state and is stored, used or consumed in Missouri. Communities have the option of adopting a local use tax equal to the local sales tax for that community.

Missouri law sets the assessment ratio for personal property at one-third of true value throughout the state. Real properties (land and buildings) classified as commercial and industrial, are assessed at 32 percent; residential, 19 percent; and agricultural, 12 percent of true or fair market value. The local property tax rate is an aggregate of school, city, county and state levies expressed in tax per $100 assessed valuation. Commercial and industrial real property is assessed an additional county surcharge designed to replace revenues lost by the tax exemption of business inventories.

Personal Income Tax
Missouri's individual income tax rates are graduated from a low of 1½% on taxable incomes of $1,000 or less, to a high of $315 plus 6% on taxable incomes in excess of $9,000. Taxable income may be reduced by a portion of federal income tax liability. Additional deductions include an allowance for each dependent, personal exemption, and federal standard or itemized deductions (which includes a deduction for FICA taxes paid through withholding).

Unemployment Insurance
The Missouri Division of Employment Security is the state agency responsible for the administration of the unemployment insurance benefit and tax program.

The term "liable employer" refers to an employing unit that has become liable to cover workers for unemployment insurance benefits and to pay unemployment taxes on the workers' wages. Each liable employer is required to file a quarterly contribution and wage report. This report must show the worker's name, social security number and the amount of wages paid to each wage earner during a calendar quarter. Work separation dates and the beginning and ending dates of probationary employment should be included in the wage detail. The report is also used to summarize total and taxable wages paid during the calendar quarter and to compute the amount of contributions due on the taxable wage total. Complete instructions for preparation of this report are furnished with the report. Contribution and wage report forms are furnished by the Division of Employment Security and are mailed to all established employers near the end of each calendar quarter. These reports should be filed and contributions paid during the month following the end of each calendar quarter. No part of the contributions due can be deducted from a worker's pay

Workers Compensation
In every state, business and industry incur some expense to provide their employees with workers’ compensation coverage. In Missouri, all businesses, with some exceptions, with five or more employees must provide workers’ compensation insurance to protect their workers in case of job-related injury, illness, or death. Companies can offer this protection through a private insurance carrier or they can become self-insurers. Premium rates vary, depending on the risks associated with special occupations. As in most states, the premium rates apply to an employee's total annual salary. The maximum weekly benefit for temporary total disability, temporary partial disability, permanent total disability and death is currently computed as 105% of the average weekly wage, determined annually on July 1. Missouri's workers’ compensation rates compare favorably with those in other states. Though benefits for claimants in other states usually increase automatically from year to year, in Missouri benefits cannot be increased without the review and approval of the state legislature.

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