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Missouri Tax Overview

March 29, 2021
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WRITTEN BY Dr. Brittany Whitley, Dr. Jill Barnas and Dr. Elena Bickell

Outside of federal dollars, state and local budgets are primarily funded by taxes on what a household or business earns (e.g., income tax), buys (e.g., sales tax) and owns (e.g., property tax). The features of different taxes can vary substantially, including who is levying the tax (county, state), who pays the tax (household, business/developer), how tax liability differs between individuals (e.g., income-based) and what programs/functions can be funded by the tax. The Hancock Amendment limits the amount of revenue that can be generated by taxes in Missouri. Tax liability can be reduced through various mechanisms, including tax credits, deductions, exemptions and exclusions. However, there are tradeoffs between tax burden and the availability of public services. These tradeoffs are often different based on the type of tax break, who qualifies, and where qualified taxpayers are located.

Highlights

  • In 2019, Missouri revenue was more than $4 billion under the Hancock limit. State revenue has only surpassed the Hancock limit once (1995-1998), resulting in a billion dollar refund to taxpayers (~$40/household).
  • Property tax revenue accounts for a significant portion of local spending. Missouri’s Property Tax Credit is intended to allow individuals living with disabilities and seniors who have fixed incomes to stay in their home by offsetting costs related to property taxes.
  • Almost ¼ of state general revenue in Missouri comes from the state sales & use tax. When city and county taxes are included, the sales and use tax rate varies across Missouri between 4.3 - 11.6%.
  • A majority of general revenue funds (~70%) come from income taxes. Most Missourians are not eligible for individual income tax exemptions.
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