Missouri Tax and CPA Services: State, County and City Taxes

Missouri is across the Mississippi River from Illinois, and many people live on one side and work on the other. Missouri's tax system has features that make that commute more complicated than it looks: a 1 percent earnings tax in both Kansas City and St. Louis that applies to people who work in those cities, a state income tax that now lets you subtract all capital gains, and local sales taxes stacked on a 4.225 percent state rate. This page covers what residents, commuters, business owners and employers need to know. We serve Missouri clients remotely from our Naperville, Illinois office.

Individual income tax

The Missouri Department of Revenue states that the individual income tax rate for tax year 2025 is 4.7 percent. Residents file Form MO-1040 and nonresidents with Missouri income file their own return.

The biggest 2025 change is the capital gains subtraction. Effective January 1, 2025, 100 percent of the income reported as capital gains for federal tax purposes is subtracted when determining Missouri adjusted gross income (Section 143.121). For people with stock, real estate or business sales, this is a significant planning point; see capital gains and losses. The same subtraction will apply to corporations starting in the tax year after the individual rate falls to 4.5 percent. The Department's changes page also lists a nonrefundable disaster credit of up to $5,000 for certain insurance deductibles.

Part-year residents and nonresidents report Missouri-source income. Employees who live in Missouri and work in a neighboring state, including Illinois, should check the credit for tax paid to the other state; see our multi-state tax service and the Illinois page.

Kansas City and St. Louis earnings taxes

Missouri has no general local income tax, but it has two very important earnings taxes.

Kansas City. The earnings tax, sometimes called the e-tax, is a 1 percent tax on earned income such as salaries, wages, commissions, tips and other compensation. All Kansas City, Missouri residents pay it even if they work outside the city. Nonresidents pay it on income earned within the city limits, and it also applies to the net profits of businesses. The city says it raises roughly $373.6 million a year. Someone who lives in Kansas or in a Missouri suburb and works downtown owes it.

St. Louis. The City of St. Louis charges a one percent earnings tax to residents regardless of where their employer is, and permanent address holders must file on 100 percent of their earnings, including college students who maintain a city address. People who move into or out of the city part-way through the year owe it only on wages earned while living or working in the city. Nonresidents who work in the city owe tax on wages earned there, and can request a refund for days worked outside the city using Form E-1R, with the days verified by the employer. Individual earnings taxes are due April 15. Businesses located in St. Louis, and nonresident businesses doing business there, pay a 1 percent earnings tax on business earnings. Employers must withhold the 1 percent tax from employees living or working in the city, and pay a 0.5 percent payroll expense tax on wages earned in the city. For employers, a single payroll can include state withholding, city withholding and, in St. Louis, the employer-paid payroll expense tax. See local payroll taxes by city and county.

Business taxes

Missouri's corporate income tax rate is 4 percent for tax years beginning on or after January 1, 2020, according to the Department. Pass-through businesses report through their owners' individual returns, so the capital gains subtraction can also matter to owners selling business interests. Check the Department's current guidance for any entity-level tax election available to pass-through businesses and for state-specific filing requirements.

Sales and use tax

The 4.225 percent state sales and use tax is distributed to four funds: General Revenue (3.0 percent), Conservation (0.125 percent), Education (1.0 percent) and Parks and Soils (0.10 percent). Cities and counties may impose local sales taxes on top, and local rates take effect on the first day of the second calendar quarter after the Department is notified, in January, April, July or October, so rates change several times a year. The Department's rate map shows the tax at an address and special rates for items such as food, textbooks, domestic utilities and adult-use marijuana. There is also a Branson-area tourism community enhancement district sales tax. See sales tax nexus and our sales tax service.

Payroll in Missouri

• Withholding: employers withhold state income tax according to the employee's W-4, and the Department publishes filing and e-file information for withholding and W-2 reporting. See state income tax withholding.
• Unemployment insurance: run by the Division of Employment Security, which publishes wage base and rate notices; confirm the current figures for your account. See state unemployment insurance.
• City taxes: Kansas City and St. Louis employers must handle the earnings taxes described above.

Counties and property tax

Missouri counties and cities impose local sales taxes, and property tax is administered locally. St. Louis City is independent of St. Louis County, and Kansas City sits across Jackson, Clay, Platte and Cass counties, so the same address can fall into different taxing jurisdictions. For neighboring Kansas, see Kansas.

How we can help

We prepare Missouri resident, part-year and nonresident returns, apply the capital gains subtraction, work out Kansas City and St. Louis earnings tax filings, and set up Missouri payroll with local taxes. If you receive a notice from the Department of Revenue or a city collector, see state tax notices and representation. Contact us to begin; this page is general information.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.