Missouri income tax is separate from the Federal income tax. The revenue is collected directly by the state and is used to fund public services. The state of Missouri collected $17.1 billion in income taxes during fiscal year 2018, which was a 4.8% increase over fiscal year 2017.

Each state has the authority to impose any types of taxes not expressly forbidden by the US Constitution or their own state constitution. How does the Show Me state collect their tax revenues? Let’s take a closer look at some Missouri tax statistics to get a better understanding:

Each U.S. state has the right to administer their own taxes on residents and non-residents, in addition to federal taxes imposed by the IRS. The federal government provides funding to each state, however, additional funds are necessary to provide other services such as law enforcement, welfare benefits, and local government needs, among others.

As a result, some states are considered to be “tax-friendlier” than others.  If you live in Missouri, you pay close to the national average tax burden. Missouri has the 22nd highest marginal tax rate in the country.

From private car taxes to cigarette taxes, continue to learn all about the Missouri tax rates and how our team at Community Tax can help you earn the most back on your state tax return.

Missouri tax brackets range from 1.5 – 5.5%.  The marginal tax rates increase relatively quickly with taxpayers earning in excess of $8,424 paying the top marginal tax rate.  The 5.5% tax rate is new, effective for tax years after December 31, 2018. The previous top marginal tax rate was 5.9%.

Missouri’s income tax brackets are complicated, and the amount withheld is dependent on the particulars of your income. 

According to the Missouri Department of Revenue, the following table describes the state tax brackets.

The statewide sales tax rate in Missouri is a minimum of 4.225%, which when combined with local taxes ranks it as the 14th highest sales tax rate in the nation. Most local jurisdictions add an additional tax on top of the standard Missouri taxes. Consumers can check to see the rate of Missouri sales tax by county and city.

In addition to state sales tax, local jurisdictions are authorized in come cases to collect an additional local sales tax at a percentage approved by voters of the applicable jurisdiction.

• Missouri local sales tax rates range from 4.225% – 5.875% dependent on the county.

Use tax is assessed on purchases made outside of the consumer’s state of resident for taxable tangible items that will be used, stored, or consumed in the state where the purchaser lives, but where the seller did not collect any taxes at the time of the sale.

For example, as a Missouri resident, you travel to a state that has no sales tax (Montana, for example) and purchase your goods to be used at home. While you may not have paid any sales taxes, you may be subject to a use tax in an amount equivalent to your local sales tax rate.

Failing to pay any applicable sales taxes may subject you to interest and penalties in addition to the taxable amounts.

• Missouri’s use tax is assessed at a rate of 4.225%.

Excise taxes are imposed to limit the use of certain goods and services. In some cases, these are called “sin taxes,” as the good or services which is being taxed is often deemed harmful to society if used excessively.

Missouri levies a sin tax on the following intems.

The state of Missouri provides for a cigarette tax that is 17 cents per pack of 20 cigarettes.

This is a 4% tax imposed on persons who purchase a motor vehicle out of state and then title the vehicle in the state of Missouri. This tax also applies to the sale of vehicles between individuals within the state of Missouri

This tax is assessed at a rate of 3% of the purchase price of new or used motor vehicles or trailers in the state of Missouri

The state of Missouri applies an additional tax of 17 cents per gallon to fuel purchased in the state.

Missouri taxes alcohol sales depending on the kind of alcohol in question. According to the Missouri Department of Revenue, this is the breakdown;

The state of Missouri has various taxes on insurance premiums received by insurance companies throughout the state. Although these insurance premiums are paid directly by the insurance company, the cost is typically passed on to consumers.

The insurance premium tax rate is limited to 2%. Worker’s compensation, however, differs by year.

Residents of Missouri enjoy some of the lowest property taxes on average in the United States.

• The median property tax paid by residents in Missouri is $1,265 per year
• Counties in Missouri collect an average of 0.91% of a property’s assessed fair market value as property tax per year
• Missouri has the 32nd highest property tax rate in the country
• The average percentage of their income that Missourians pay in property taxes is 2.24% based on an average income of $56,617 a year
• The property tax levied in Missouri depends on the county in which you live
• St. Charles County collects the highest property tax with an average of $2,377
• Shannon County collects the lowest property tax with an average of $348

Property taxes are assessed by county with each county using its own methods to assess the property tax. Consequently, it is difficult to determine a single tax rate that applies to the state.

The state has 115 tax assessor programs (114 counties, 1 independent city), each with its own guidelines for assessment.

Inheritance and estate taxes are taxes levied on those who inherit a large sum of money, capital, real estate, or stock after someone passes away.

The state of Missouri is one of 38 states that does not have an estate or inheritance tax.

The federal government, however, does impose a tax on certain inheritances. As of 2019, the federal estate tax is limited to estates valued over $11.4 million. If this situation applies to you, you may want to consult with a tax expert to avoid any chance of an audit.

Missouri has a number of credits that can help residents to reduce their tax burden in the state including:

Senior citizens and 100% disabled individuals who rent or own a home in the state of Missouri may claim a credit for rent or real estate taxes paid during the taxable year.

• Renters in the state may claim up to $750
• Homeowners can claim up to $1,000

Property tax credits also exist for the following cases:

• Single taxpayers earning $27,500 or less each year
• Married filing combined taxpayers earning $29,500 or less per year
• Single taxpayers earning $30,000 or less each year
• Married filing combined taxpayers earning $34,000 or less each year

A credit of up to $10,000 is available for Missouri residents who adopt a special needs child who is a resident of the state of Missouri. This credit is for nonrecurring expenses that are directly related to the adoption.

If you make donations in excess of $100 to a qualifying organization, you may be eligible for a credit of 50% of the amount contributed. This is a nonrefundable credit.

If you donate a minimum of $100 in cash, real property or marketable securities to a qualified domestic violence shelter, you may claim a credit of up to 50% of your contributed amount. It is important to note that the limit of the credit is $50,000 and this is a nonrefundable credit.

If you have incurred expenses to make your home more accessible because you or someone in your home has a disability, you may receive a credit for expenses incurred up to $2,500. This credit has income limitations and other eligibility requirements in order to receive the credit.

While tax credits reduce your tax liability dollar for dollar, exemptions and deductions reduce taxable income prior to the calculation of your state income tax liability.

Due to changes in the federal tax law, Missouri has removed the following exemptions from the state tax return.

• Personal Exemptions
• Dependent Exemptions
• Additional Personal Exemptions
• Over age 65 dependent exemption

For taxpayers who choose not to utilize itemized deductions on their Missouri tax return, a standard deduction is allowed. Beginning in tax year 2018, the deductions are as follows:

• Single - $12,000
• Married filing combined - $24,000
• Married filing separate - $12,000
• Head of Household - $18,000
• Qualifying Widow(er) - $24,000

Missouri itemized deductions follow the same income deductions as the federal itemized deductions. However, you can only itemize your deductions in Missouri if you itemized for Federal tax purposes.

For Missouri tax purposes, however, the state tax portion of itemized deductions is limited to $5,000 for those who are married filing separately and $10,000 for all other filing statuses (single, married filing combined, head of household, and qualifying widow(er)).

In addition to the deductions on the federal tax return, additional itemized deductions are available for expenses such as social security tax, Medicare tax, self-employment tax, and railroad retirement tax.

For taxpayers with business income, the state of Missouri allows for a 5% business income deduction based on the combined earnings from Schedule C and Schedule E of the federal tax return.

Missouri allows taxpayers to make a deduction from taxable income for contributions made to both Missouri and non-Missouri 529 plans. Individuals may deduct up to $8,000 per year, while married couples filing a combined return may deduct $16,000 per year.

If the health insurance premiums that you pay are not already exempt from income tax, you may be eligible to deduct the amount that you paid out of pocket on your Missouri state tax return.

Taxpayers who paid an individual certified by the Division of Energy to complete a home energy audit may deduct the cost of both the audit and the cost of the implementation of any recommendations identified by the auditor. The total deduction may not exceed $1,000 for single taxpayers or $2,000 for those filing a combined return.

For taxpayers who contribute to a STABLE (Achieving a Better Life) account, they may be eligible to deduct contributions on their Missouri tax returns. Single taxpayers may deduct up to $8,000 in qualifying contributions while taxpayers filing a combined tax return may deduct up to $16,000 of contributions made.

If you’re required to pay taxes to the state government, the IRS and state of Missouri have the same filing deadlines in order to submit your estimated tax payments.

First quarter payment: Due April 15th

Second quarter payment: Due June 15th

Third quarter payment: Due September 15th

Fourth quarter payment: Due January 15th of the following year

When filling out your taxes, it’s important to have all the information you’ll need. Keep these essential items with you when you file:

• Tax returns from previous years
• All w-2's mailed to you by your employers.
• Any statement of earnings from the investments you may have made.
• Your social security number.
• The proof and documentation you may need for any deductions, exemptions, or tax credits you qualify for.

Remember, once you’ve submitted your federal taxes, you’ve still got to fill out and file your state taxes.

• Filing taxes in the state of Missouri can be complicated. In order to ensure the most accurate filing and achieve the maximum refund allowed, consider consulting an expert to assist you.

• Online – You can pay your state taxes online in two ways:
• Electronic Bank Draft (E-Check) – You may pay your taxes with your checking or savings account.  The state of Missouri applies a 50 cents handling fee in order to take advantage of this service.
• Credit or Debit cards – You may pay your taxes with a debit or credit card.  The amount of the convenience fees applied for process will depend on the amount of the taxes paid

• Up to $50.00 = $1.25

• $50.01 - $75.00 = $1.75

• $75.01 - $100.00 = $2.15

• Over $100.00 = 2.15% of the tax amount being paid

• Online Installment Agreement – Individuals and Businesses can request a payment plan in order to satisfy their tax obligations
• The Missouri Department of Revenue also accepts payment via the mail or by calling (888) 929-0513.  Payment is accepted via credit card, check, or money order.

Remember that state taxes are only half of the picture. Federal tax returns are due every year as well. If you need a little help navigating the confusing world of state and federal taxes, be sure to reach out to a community tax representative.