Missouri Tax Guide: Declining Rate Structure

Tax Overview

Missouri has been steadily reducing its income tax rates through automatic trigger mechanisms tied to revenue growth. The top rate has declined from 5.4% to approximately 4.7%, with further reductions possible. The state uses a progressive system but with a relatively low top bracket threshold, meaning most taxpayers with moderate incomes pay near the top rate.

Sales tax in Missouri has a relatively low state rate of 4.225%, but local taxes are significant and can push the combined rate above 10% in some areas, particularly in parts of the St. Louis and Kansas City metropolitan regions. Missouri taxes groceries at a reduced state rate of 1.225%. The high variability in combined rates across the state creates complexity for businesses and consumers.

Property taxes in Missouri are moderate, with effective rates around 0.98%. The state offers a homestead preservation credit for qualifying senior citizens and disabled residents. Missouri allows taxpayers to deduct their federal income taxes on their state return, which is a benefit shared by only a few states. This deduction can significantly reduce state tax liability for higher-income residents.