Overview of Missouri Retirement Tax Friendliness
In Missouri, income from retirement accounts, such as IRAs and 401(k)s, is taxed as regular income, though some exemptions are available. Missouri has combined state and local sales tax rates that are higher than the national average but property taxes that are below the national average.
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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 Kansas City, St. Louis, 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 are eligible for a full exemption, while those with income from a public pension also enjoy a substantial deduction. However, income from retirement accounts such as an IRA or 401(k) are taxed as regular income.
Missouri also has combined state and local sales taxes that are slightly higher than the national average and property taxes that are a bit lower than the national average.
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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, at least partially. The state also has relatively low property taxes, but its sales tax is above average.
Is Social Security taxable in Missouri?
Starting in 2024, Social Security is no longer taxable in Missouri for people 62 and older. A tax cut passed in 2023 removed the income limits that previously determined who had to pay state taxes on Social Security benefits.
Are other forms of retirement income taxable in Missouri?
Missouri provides a deduction for public pension income that's equal to the maximum Social Security benefit in a given year. For 2024, the state allows those with public pension income to deduct up to $46,381.
Meanwhile, income from private pensions and retirement accounts, such as an IRA or 401(k), is taxable at the rates shown below. There is, however, an exemption available to single filers with a MAGI of no more than $25,000. If you file jointly, your exemption doubles in size, but the MAGI limit does not, as it is $32,000.
How high are property taxes in Missouri?
Missouri’s property taxes are a significantly less than the national median. A typical homeowner in the Show Me State pays about $1,676 while the median property tax bill across the country is $2,869. 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 or disabled. 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 $27,200 for single filers and $29,200 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 13th-lowest in the country, but this doesn't represent the maximum rate with local sales taxes. Local rates can range as high as 7.76%.
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 some of the lowest gas taxes, cigarette taxes and alcohol taxes in the country.
