Comprehensive Guide to Payroll Taxes in Missouri

In the US, employers must navigate complex federal and state-specific regulations and requirements for payroll withholding and payments. This article serves as a comprehensive guide for employers in Missouri.

General overview

Missouri employers must withhold and remit state and federal taxes on behalf of their employees, including FICA tax and Personal Income Taxes.

Employers in Missouri must contribute to programs such as state unemployment insurance (SUI) and workers' compensation Insurance, as well as federal FICA tax and federal unemployment tax (FUTA).

Personal income taxes

Missouri employers are liable for calculating, deducting, withholding, and remitting personal income taxes (PIT) to the state from their employees' wages. This includes federal income tax, state income tax, and local income tax (only for St Louis and Kansas City).

Federal income tax

The rate of federal income tax an employee pays is based on their income and any exemptions they're eligible for. Employers must remit withholdings to the IRS via the IRS’ Electronic Federal Tax Payment System (EFTPS).

State income tax

State income tax (SIT) in Missouri is charged on personal income at a progressive rate, as displayed in the table below:

*Missouri's top SIT rate will drop to 4.7% from January 1, 2025.

Missouri employers can file and pay withheld SIT through the Missouri Department of Revenue's secure online portal. The required filing frequency varies:

• Quarter-Monthly $9,000+ per month withheld for two or more months in the past year. Due within three banking days after the 7th, 15th, 22nd, and last day of the month
• Monthly: $500+ withheld for at least two months in the previous year. Due on the 15th of following month
• Quarterly: Between $100 per quarter and $500 per month in any quarter during the last year. Due on the last day of the month after the quarter ends
• Annually: Less than $100 per quarter during each of the last four quarters. Due by January 31 of the following year.

In addition, all employers are required to submit an annual reconciliation using Form MO-941 by January 31 of the following year. For not filing by the due date, a penalty of 5% per month is added, up to a maximum of 25% of the unpaid tax amount. A one-time penalty of 5% of the unpaid tax is imposed, and simple interest will also be charged on any unpaid tax.

Local income tax

• St. Louis levies a 1% earnings tax on residents and those who work in the city, which employers must withhold and remit. Employers must also pay an additional 0.5% payroll expense tax on wages earned in the city. Both taxes must be remitted quarterly to the Earnings Tax Department, City of St. Louis Collector of Revenue.
• Kansas City imposes a 1% earnings tax on residents and those who work in the city, which employers must withhold and remit to the Revenue Division, City of Kansas City, Missouri. The required filing frequency (monthly, quarterly, or annually) is usually assigned by the Kansas City Revenue Division upon employer registration. Kansas City employers must also file an annual reconciliation return for the previous tax year by the last day of February.

Social Security and Medicare (FICA) taxes

FICA (Federal Insurance Contributions Act) payroll taxes include Social Security and Medicare contributions, which Missouri employers are required to withhold and remit.

• Social Security: Employees are taxed at 6.2% on their entire salary, up to the 2024 annual wage limit of $168,600 USD.
• Medicare Tax: Employees pay a Medicare tax of 1.45% on their full income
• Additional Medicare Tax: A further 0.9% is levied on high earners with an income over $200,000 for single filers, or over $250,000 for married couples filing jointly.

Employers are required to match employees' Social Security contributions and Medicare Tax, but are exempt from Additional Medicare Tax payments.

State unemployment insurance

State unemployment insurance (SUI) in Missouri is an employer-funded program which provides a vital safety net for individuals who find themselves unemployed due to unforeseen circumstances.

SUI in Missouri is charged on a taxable wage base of $10,000 per employee. Rates vary based on the sector and the employer's experience rating. However, new employers in 2024 pay 2.376%, except non-profit organizations, who pay 1%.

You can manage and pay SUI on behalf of your employees via the state's secure online portal. For more information on paying unemployment insurance, you can visit the Missouri Department of Labor and Industrial Relations website.

Workers’ compensation

In Missouri, businesses with five or more employees are obligated to have workers' compensation insurance, except for those in the construction industry, where the requirement applies if you have one or more employees. Some exemptions apply.

Workers' compensation is a mandatory insurance system enforced by the state that provides "no-fault" coverage. It offers benefits for employees who suffer job-related injuries, covering medical expenses, a portion of lost wages, and permanent disability.

In exchange, this system grants employers immunity from civil lawsuits filed by employees for work-related injuries. Employers must purchase workers’ compensation insurance from a qualified commercial carrier or obtain certification from the state to self-insure.

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