Missouri Basic Business Taxes 2010
Missouri's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include sales and use taxes and exemptions, property tax abatements, the Quality Jobs Program, and the Rebuilding Communities Program tax credit.
Area Development Research Desk (Feb/Mar 10)
Corporate income tax:
The net effective tax rate is 5.2 percent due to the federal deduction.
Sales and use taxes/exemptions:
A state sales tax of 4.225 percent is imposed on all tangible personal property and taxable retail services, as well as certain leases and rentals. Businesses may deduct two percent of the amount due to the state if paid on time.
A state use tax equal to 4.225 percent is imposed only when tangible property comes into the state and is stored, used, or consumed in the state. The tax does not apply to items subject to or exempt from sales tax. Businesses may deduct two percent of the amount due if paid on time.
Various communities can adopt a local sales tax generally ranging from 0.5 percent to 1.5 percent. A local use tax can also be imposed equal to the city/county local sales tax.
Real and tangible personal property is subject to taxation. Commercial or industrial real property is assessed at 32 percent of fair market value. All personal property is assessed at 33.3 percent of fair market value. Personal property is assessed where located.
All manufacturers and merchants must be licensed and property taxes must be paid on machinery and equipment. Manufacturers' inventories; raw materials; goods in process, as well as finished goods held for trade by retailers, wholesalers, and distributors are exempt.
Property tax abatements:
There are several ways that property tax abatement can be achieved: (1) Chapter 100 Revenue bonds - the city/county owns the assets financed by the bonds and leases to the company for the term of the bonds; (2) private developers may establish a 353 Urban Redevelopment Corporation for blighted areas; (3) enterprise zones may also offer an abatement of up to 100 percent for up to 25 years on improvements to real property.
Quality Jobs Program:
Most businesses are eligible if the average wages of new jobs created exceeds the average county wage and the company provides insurance benefits. The benefits of the program are retaining the state withholding tax of the new jobs, and tax credits (fully refundable or sellable). The amount of the benefit is based on a formula.
Rebuilding Communities Program tax credit:
Certain businesses in distressed communities may be eligible for the Rebuilding Communities Tax Credit.
Certain businesses that are established in or relocate to a distressed community and that have no more than 100 employees, at least 75 percent of whom are employed in that community, are entitled to a three-year tax credit. It is equal to 40 percent of the company's taxable income, not to exceed $125,000 per year.
In lieu of this, the company may claim a three-year, 40 percent credit against the purchase price of specified equipment. This cannot exceed $75,000 per year. A company already located within a distressed community may claim a 25 percent credit against the purchase price of such equipment.
Employees shall be eligible for an income tax credit equal to 1.5 percent of gross wages each year for three years. The total amount of all new credits is limited to $10 million per year. All of these credits can be sold, transferred, or assigned.
Certified machinery, equipment, and devices that abate air or water pollution are exempt from sales and use taxes.
Industrial machinery and equipment:
Exemptions from sales and use taxation are allowed for the following: machinery and equipment used to manufacture a product when purchased to establish a new or expand an existing facility, whether bought in Missouri or in another state; manufacturing machinery and equipment bought to replace similar existing manufacturing machinery and equipment; materials and supplies used to install the categories of exempt machinery and equipment mentioned above; railroad rolling stock used in interstate commerce; pumping equipment and machinery used by common carriers to propel products transported by pipeline; equipment used by common carriers for the manufacture, maintenance, or repair of railroad rolling stock, aircraft, or motor vehicles; and aircraft purchased for use in interstate commerce by common carriers.
Industrial fuels and raw materials:
The following are also exempt from sales and use taxes: materials, goods, parts, and machinery that become component parts of finished products; materials used to produce steel; motor fuel; fuel used by utilities to provide taxable services; and electricity consumed in the manufacturing process, provided the cost of the electricity exceeds 10 percent of total production costs.
Missouri State Contact:
Missouri Department of Economic Development
P.O. Box 118
Jefferson City, MO 65102
(573) 751-9045 or (800) 523-1434
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.