- State Business Taxes
- Federal Business Taxes
- City and County Tax
- State Unemployment Tax
- Federal Unemployment Tax
Types of Taxes
- Corporate Income Tax
- Sales/Use Tax
- Franchise Tax
- Property Taxes
- Initial Fees and Taxes
- Personal Income Tax
- Workers Compensation
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.
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 has responded to the needs of industry by providing eighteen major exemptions from sales/use taxes:
- Machinery and equipment used to establish a new, or expand an existing manufacturing facility are tax-exempt, provided such machinery/equipment is used directly to manufacture a product ultimately intended for sale.
- Replacement machinery and equipment used directly in manufacturing a product ultimately intended for sale.
- Machinery, equipment and devices which abate air pollution. To qualify for this exemption, a company need only have the appropriate state governmental agency certify that the equipment is pollution control equipment.
- Machinery, equipment and devices that abate water pollution. To qualify for this exemption, a company need only have the appropriate state governmental agency certify that the equipment is pollution control equipment.
- For tax periods beginning after December 31, 1995, machinery and equipment used to establish a new, or replace or expand an existing material recovery processing plant. The plant must convert recovered materials into a new product or different form. After August 28, 1996, this exemption includes equipment used to transport recycled materials to the recycling center (not including motor vehicles).
- All materials and supplies used to install this tax-exempt machinery and equipment also may be purchased tax-exempt.
- Sales tax is not imposed on electricity consumed in the manufacturing process provided the cost of the electricity exceeds ten percent of total production costs. The cost of electrical energy consumed in the manufacturing process cannot be included in total production costs to qualify for the exemption. Electricity used for non-manufacturing purposes, such as lighting and heating, is taxable.
- Electricity or gas, whether natural, artificial or propane, is tax-exempt when used in connection with basic steel making.
- For tax periods beginning after December 31, 1995, electricity which is converted to stored chemical energy for providing an initial charge in lead-acid storage batteries during the manufacturing process, if this electricity is separately metered. This exemption does NOT apply to any local sales taxes.
- Anodes used in manufacturing or other types of production, with a useful life of less than one year, may also be acquired tax-exempt.
- For tax periods beginning after December 31, 1995, computer, computer software, and computer security systems purchased for use by architectural, engineering, or accounting firms headquartered in Missouri.
- Exempts nonreusable items furnished to hotel or motel guests from sales and use tax.
- Exempts samples and materials used to manufacture prescription drug samples that can be dispensed by an authorized practitioner.
- Exempts slagging materials, firebrick and other products (including gases) that are blended with, or become ingredients or other component parts of steel products.
- Exempts electrical energy meeting certain criteria whether facilities are leased or owned.
- Exempts electrical energy used for cold storage at production facilities.
- Exempts sales of barges used in interstate waterways for transportation of property or cargo.
- Exempts sales of “livestock” (the definition of which is expanded to include goats, horses, other equine and rabbits). This exemption will also apply to medications, vaccines, feed additives, feed and bedding purchased for these animals if they are used in the production of food or fiber.
Missouri's franchise tax is based on capital employed in a company. The rate is 1/30 of 1%, or $0.33 per $1,000 of par value of outstanding shares and surplus or total assets. Corporations with less than $1,000,000 outstanding shares and surplus are not taxed. Multi-state corporations are subject to franchise tax only on that portion of total company shares and surplus which occurs in Missouri. The tax is computed by applying the percentage of total property and assets which occurs in Missouri to total company shares and surplus. For example, a company with $5,000,000 in outstanding shares and surplus, with 10% of its property and assets in Missouri, would have a franchise tax of $165. http://www.dor.mo.gov/tax/business/franchise/
Property tax is often a major tax expense for a company. Because it is set and administered locally, property tax is seldom comparable from state to state. Not only do tax levies vary widely from one city to another, but the assessment ratio for determining property value differs significantly among the 50 states. Even within one state assuring a uniform assessment practice is very difficult.
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.
The average county surcharge is about $1.02 per $100 assessed valuation, for a total commercial/industrial real property average tax rate of about $6.89 per $100. The average total personal property tax rate is about $5.87 per $100 valuation.
For example, at a particular Missouri site the commercial and industrial property tax rates might be as follows:
|Surtax (real property)||$ 1.02|
Total rates per $100
Personal Property................................. $5.87
Real Property..................................... $6.89
Thus a company would pay $5.87 per $100 on 1/3 of its total personal property, and $6.89 per $100 on 32% of its total real property value.
NOTE: This is provided as an example only, your actual tax liability will vary based on the tax rates for the specific business location.
Initial Fees and Taxes
A new corporation must pay an incorporation fee of $50 for the first $30,000 or less of shares and $5 for each additional $10,000 or portion thereof. A foreign corporation pays $150 for certification. Annual corporate registration fees must also be paid by domestic and foreign corporations doing business in Missouri. The rate is $40 annually for registration with the Secretary of State's Office.
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).