First, there’s the federal tax—Uncle Sam wants his piece. But for many, the second big hit is the state tax, which, in some instances, can hurt just as badly as the federal tax. But in Missouri, tax time is a little easier.
Missouri Lowers Personal Income Tax Rate
Led by Republican Governor Mike Parson, Missouri passed the largest tax cuts in its history. It reduced the top individual income tax rate from 5.2 to 4.95 percent. This meant that the majority of Missourians will see around a 5 percent decrease in taxes.The new tax cuts eliminated income taxes for individuals making their first $1,000.
Missouri’s tax cuts also eliminated income taxes for individuals making less than $13,000 annually. Married couples who filed jointly saw taxes eliminated if they earned less than $26,000.
Social Security Tax-Free in Missouri
Up until this year, there were 11 states in the union that taxed Social Security benefits. That number changed this year.Effective July 2023, Governor Parson signed a bill exempting Social Security payments from state income. It removed the income threshold for deductibility. This means that federal Social Security payments will not be subject to state taxation.
- Colorado
- Connecticut
- Kansas
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
Missouri Working Family Credit
The Missouri working family credit is available. Taxpayers can receive a ten percent credit off their federal earned income credit.The family credit cannot be refunded or carried forward. But it will reduce any tax liability after all credits have been applied.
Eligible taxpayers must be a full-time Missouri resident. The filing status must be single, head of household, qualifying widow(er) or married filing combined.
Farmland Sold to Beginner Farmer Deduction
Land is expensive, and selling farmland to large business entities has been in the news. But, Missouri wanted to make it easier for new farmers to purchase or lease land.If a Missouri farmer sells, rents, leases, or has a crop-sharing agreement with a beginning farmer, they will receive help on their capital gains tax. The farmer will receive a deduction of a set percentage on their capital gains. The dollar amount cannot exceed $25,000.
To qualify, you must provide a certification from the Missouri Department of Agriculture validating the sale, rental, lease or crop share agreement.
Intern and Apprentice Tax Credit
The Intern and Apprentice Recruitment Tax Credit program provides a tax credit to employers who hire interns or apprentices. The tax credit is $1,500 per qualified intern or apprentice.These credits aren’t refundable and cannot be carried forward or sold. The program’s annual cap is one million dollars.
Missouri Standard Deduction Amount
Missouri’s standard deduction is now equal to the federal government:- single—$13,850
- married filing separate—$13,850
- married filing jointly—$27,700
- head of household—$20,800
- qualified widow(er)—$27,700
Missouri Income Tax Deduction
This is a deduction, not a credit. The difference is that a deduction reduces how much of your income is subject to taxes. Once you have determined that number, apply the tax credit to your tax liability.- sole partnerships
- partnerships
- S corporations
- limited liability companies (LLCs)
Missouri Corporate Tax
Missouri is friendly to corporations. With a 4 percent corporate tax rate, it ranks the second lowest in the nation. North Carolina is the lowest corporate tax at 2.5 percent. Minnesota rings in as the highest at 9.8 percent. Meanwhile, South Dakota and Wyoming don’t levy a corporate tax.Missouri State Sales Tax
Missouri’s statewide sales tax is 4.225 percent. Localities are capped at 5.763 percent. In Missouri, groceries are taxable. The grocery tax is 1.225 percent, and additional local taxes can apply.Missouri Property Tax Credit for Seniors
A Missouri property tax credit of up to $1,100 is available for eligible homeowners age 65 or older.The senior must have owned and lived in their home for an entire year. There is an income threshold set each year that the senior cannot exceed. And all real estate taxes must be paid.
Business-Friendly Missouri
Missouri’s end to taxing Social Security benefits is a plus for seniors. Taxpayers who are 65 or older benefit from a property tax credit.Reversing a decades-long decline, Missouri’s new businesses have been increasing. In 2023, companies in Missouri employed 3,140,634 people. It had an annual employment growth of 1,870 percent over the past five years. This increase correlates with Missouri lowering its corporate tax to the now, 4.225 percent.
But there are some drawbacks to its taxes. Although overall, it’s ranked 12th for favorable tax policies, it’s ranked 30th for sales tax.
