Missouri Sales Tax
Missouri requires taxable businesses to collect sales tax on all purchases made by customers in the state.
Sales tax is a state-imposed consumption tax levied on the final buyer of tangible personal property. Generally, businesses have to register to collect sales tax and report on a regular basis, either monthly, quarterly, or annually. Companies with significant nexus in Missouri are required to register to collect and remit sales tax, and they must include the correct tax rate on all their taxable products.
Missouri has a general sales tax rate of 4.225 percent, and some local governments also impose their own rates. A use tax, which is complementary to the sales tax, is charged on purchases of certain services and goods that are not subject to the state sales tax.
State and local taxes are applied differently in each jurisdiction, and some products and services are taxable in one state but not another. Some customers are exempt from paying sales tax, and buyers must provide a valid exemption or resale certificate to validate their eligibility. The rules are constantly changing, and staying on top of the latest updates is critical.
Sales tax laws are complicated, and the rules and regulations change regularly. Many companies make costly mistakes that lead to overpaying the state. Businesses should never agree to a sales tax audit assessment until it has been reviewed by an expert in state and local tax. Once an agreement is reached, the business can pay the tax and seek a refund. If this deadline is missed, it can be difficult to get the case reopened.
New Missouri Sales Tax Laws
New laws are taking effect in 2024 that could impact the way Missourians pay sales tax. These laws include price caps during the state’s annual back-to-school tax holiday, school supply tax holidays in Arkansas and Missouri, a three-month “Freedom Summer” sales tax holiday for certain outdoor items, and a weeklong “Tool Time” sales tax holiday for qualifying tools and hearing protection. Missouri is a destination-based sales tax state, meaning that sellers charge sales tax based on the buyer’s location.
The state has also enacted economic nexus rules, which require out-of-state vendors to collect sales taxes from buyers in the state. The rule requires that sellers who don’t have physical presence in the state must register if their gross receipts from taxable sales to Missouri customers exceed $100,000. This rule will apply to online retailers and marketplace facilitators. Beginning in 2024, Social Security and public pension benefits are tax-exempt from the state’s sales tax. The state also doesn’t tax alcohol or tobacco products, and it doesn’t tax heirs on inheritance. In addition, the state’s income tax rates are low.
