Overview of Missouri Retirement Tax Friendliness
In Missouri, income from retirement accounts such as an IRA or 401(k) are taxed as regular income. Missouri has sales taxes that are slightly higher than the national average and property taxes that are somewhat below the national average.
Annual Social Security Income
Annual Retirement Account Income
Year of Birth
Annual Income from Private Pension
Annual Income from Public Pension
|is toward retirees.|
|Social Security income is taxed.|
|Withdrawals from retirement accounts are taxed.|
|Wages are taxed at normal rates, and your marginal state tax rate is %.|
- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Missouri Retirement Taxes
The State of Missouri stretches from the Mississippi river in the east to its western border with Kansas. Like many other Midwestern states, it has four seasons with hot, humid summers and cold winters. Its four largest cities are St. Louis, Kansas City, Springfield and Columbia.
Depending on their level of income, retirees living in Missouri may not have to pay state income taxes. Most seniors who live entirely on Social Security retirement benefits and public pension income are eligible for a full exemption on that income. However, income from retirement accounts such as an IRA or 401(k) are taxed as regular income.
Missouri also has sales taxes that are slightly higher than the national average and property taxes that are a bit lower than the national average.
A financial advisor in Missouri can help you plan for retirement and other financial goals. Financial advisors can also help with investing and financial plans, including taxes, homeownership, insurance and estate planning, to make sure you are preparing for the future.
Is Missouri tax-friendly for retirees?
Missouri is moderately tax-friendly for retirees. Social Security retirement income is fully exempt for seniors earning less than $85,000 per year if filing single and $100,000 per year if filing jointly. Public pension income, from a teachers’ retirement system for example, is eligible for a significant deduction. All other forms of retirement income in Missouri are taxable. The state also has relatively low property taxes, but its sales tax is above average.
Is Social Security taxable in Missouri?
Social Security is taxable here, but for most seniors, it will be fully exempted. Seniors with an Adjusted Gross Income (AGI) below either $85,000 (for single filers or heads of household) or $100,000 (for joint filers) do not have to pay taxes on Social Security income. That is true even if it was taxed federally. Above those AGI cut-offs, Social Security retirement income is subject to the state income tax rates shown in the next section.
Are other forms of retirement income taxable in Missouri?
Income from retirement accounts, such as an IRA or 401(k), is taxable at the rates shown below. Income from a company pension is also taxable. Income from a public pension is eligible for a deduction of up to $37,720 annually. If your annual public pension is lower than that, you will not pay state income taxes on it. Any public pension income exceeding that deduction will be taxed as regular income.
Income Tax Brackets
|Missouri Taxable Income||Rate|
|$0 - $104||0.00%|
|$104 - $1,053||1.50%|
|$1,053 - $2,106||2.00%|
|$2,106 - $3,159||2.50%|
|$3,159 - $4,212||3.00%|
|$4,212 - $5,265||3.50%|
|$5,265 - $6,318||4.00%|
|$7,371 - $8,424||5.00%|
How high are property taxes in Missouri?
Missouri’s property taxes are somewhat below the national average. A typical homeowner in the Show Me State pays about $1,000 in property taxes for every $100,000 in home value. Overall, housing costs in Missouri are lower than the U.S. average.
What is the Missouri property tax credit?
Seniors in Missouri may be eligible for a form of property tax relief called the Missouri property tax credit. The credit is equal to a maximum of $1,100 for owners and $750 for renters.
To qualify, homeowners must be at least 65 years old and they must own and occupy their home. Full-year owners must have total income of $30,000 or less if they are single filers. Joint filers must have a total income of $34,000 or less. The limits are somewhat lower for part-year owners, at $27,500 for single filers and $29,500 for joint filers. The limits for renters are the same as the limits for part-year owners.
How high are sales taxes in Missouri?
Sales taxes in Missouri are somewhat higher than the national average, but how much you end up paying depends on where you live and shop. The statewide rate is just 4.23%, ranking Missouri as the 39th highest in the country, but this doesn't represent the maximum rate for local sales taxes. Local rates can range as high as 5.45%.
What other Missouri taxes should I be concerned about?
Missouri does not have an estate tax or an inheritance tax. It's also important to note that the state has one of the lowest gas taxes, cigarette taxes and alcohol taxes in the country.
Missouri taxes 17 cents per gallon on all motor fuel, while it charges 17 cents for a 20-pack of cigarettes and 21.25 cents for a 25-pack of cigarettes. The state's sales 4.23% sales tax applies to gas, cigarettes and alcohol.
Most Tax Friendly Places for Retirees
SmartAsset’s interactive map highlights the places in the country with tax policies that are most favorable to retirees. Zoom between states and the national map to see the most tax-friendly places in each area of the country.
Methodology To find the most tax friendly places for retirees, our study analyzed how the tax policies of each city would impact a theoretical retiree with an annual income of $50,000. Our analysis assumes a retiree receiving $15,000 from Social Security benefits, $10,000 from a private pension, $10,000 in wages and $15,000 from a retirement savings account like a 401(k) or IRA.
To calculate the expected income tax this person would pay in each location, we applied the relevant deductions and exemptions. This included the standard deduction, personal exemption and deductions for each specific type of retirement income. We then calculated how much this person would pay in income tax at federal, state, county and local levels.
We calculated the effective property tax rate by dividing median property tax paid by median home value for each city.
In order to determine sales tax burden we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a city by the household income after subtracting income tax. This product is then multiplied by 35% to estimate the sales tax paid.
For fuel taxes, we first distributed statewide vehicle miles traveled to the city level using the number of vehicles in each county. We then calculated miles driven per capita in each city. Using the nationwide average fuel economy, we calculated the average gallons of gas used per capita in each city and multiplied that by the fuel tax.
For each city we determined whether or not Social Security income was taxable.
Finally, we created an overall index weighted to best capture the taxes that most affect retirees. The income tax category made up 40% of the index, property taxes accounted for 30%, sales taxes 20% and fuel taxes 10%.
Sources: Internal Revenue Service, Social Security Administration, state websites, local government websites, US Census Bureau 2018 American Community Survey, Avalara, American Petroleum Institute, GasBuddy, UMTRI, Federal Highway Administration