Missouri Basic Business Taxes 2011
Missouri's economic development, finance, and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include corporate income taxes, sales and use taxes and exemptions, and property taxes.
Missouri's corporate income tax rate of 6.25 percent is applied to Missouri taxable income. In Missouri, this is the same as federal taxable income. Missouri allows 50 percent of federal income tax payments to be deducted before computing taxable income, leading to an effective tax rate of 5.2 percent.
An important tax advantage for Missouri businesses is the amount of income considered taxable - only income earned in Missouri is taxed. Two allocation options are offered for calculating this income: (1) the three-factor formula, based on sales, property and payroll or (2) the single-factor formula, based only on sales. Missouri permits companies to choose the income allocation formula that results in the lesser corporate income tax liability. This means that companies are not penalized for locating property and jobs in Missouri as they are in the other states.
Sales and use taxes/exemptions:
Missouri's sales tax is 4.225 percent. Missouri communities have the option of adopting a local sales tax, generally ranging from 0.5-1 percent. Counties may also adopt a sales tax generally ranging from 0.25-1 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.
Certified machinery, equipment, and devices that abate air or water pollution are exempt from sales and use taxes.
Industrial machinery and equipment:
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, as well as replacement machinery and equipment used directly in manufacturing a product ultimately intended for sale.
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; and electricity consumed in the manufacturing process, provided the cost of the electricity exceeds 10 percent of total production costs.
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.
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.