Missouri has a state income tax and unemployment tax that most employers are required to pay. Additionally, St. Louis and Kansas City charge local income taxes, which employers need to withhold from covered employee paychecks.
Before you begin running payroll in Missouri, here’s every step you need to take to set up your business and calculate taxes correctly.
1. Register with Tax Departments
After establishing your company as a legitimate business in Missouri, you’ll need to register it with the correct taxation departments so you can legally withhold and pay the state’s taxes.
Missouri’s state income tax is paid by employees, but employers withhold it from their paychecks and file and pay to Missouri. You’ll register to be able to withhold this tax via the Missouri Department of Revenue’s MyTax portal.
This online portal lets you start and resume tax returns, calculate withholding, check and update your registration, and request payment plans.
For the state’s unemployment tax, which is used to fund Missouri’s unemployment program and is paid only by the employer, you’ll register an account with UInteract. This is where you’ll file and pay your unemployment tax quarterly.
Finally, if you have employees who are subject to income tax withholding in Kansas City, you’ll need to register for Kansas City taxes via Quick Tax.
For St. Louis taxes, download, complete, and submit Form E-9 to register a business account with the city. St. Louis allows online tax payments but doesn’t have an online tax filing portal. Still, you can bookmark Form W-10, a fillable PDF you can fill out and submit with your tax payments.
2. Collect and Report New Hire Information
Missouri requires any employee who’s required by federal law to fill out Form W-4 to be reported to the state as an employee by their employer. This is required before you can begin withholding payroll taxes on an employee.
Employers must report any new employees within 20 days of their hire date and include the following information:
- Employer name, address, and Federal Employer Identification Number (FEIN)
- Employee name, address, and Social Security number
- Employee date of hire
Every employee also needs to fill out Form MO W-4, which is Missouri’s version of the federal W-4. It indicates an employee’s allowances for tax purposes, allowing you to calculate the correct amount of withholding taxes.
Employers can register with the Missouri Department of Social Services to report new hires online.
Missouri also allows new hire data to be uploaded via a spreadsheet, faxed to 877–573–6172, or mailed to the following address:
Missouri Department of Revenue
PO Box 3340
Jefferson City, MO 65105–3340
3. Calculate and File State, Unemployment, and Local Taxes
Now, onto the meat of Missouri payroll taxes, which is calculating and filing each tax. Here are the rates and deadlines you need to know for Missouri’s income tax, unemployment tax, and local taxes.
Missouri Income Tax
Missouri’s income tax rate ranges from 2.00% to 4.95%, depending on the employee’s taxable income. As an employer, you’ll need to calculate the correct rate based on the information an employee provides in their MO W-4 form and their projected income for the year.
For employees without an annual salary, you’ll need to use the gross pay from the current pay period and calculate that by the total number of pay periods they’ll have in the year to get an estimated annual wage.
For example, an employee making $2,000 this pay period and getting paid biweekly with 26 pay periods yearly will earn approximately $52,000 this year.
Then, subtract the deduction for the employee’s filing status. Let’s say this employee is head of household, giving them a $20,800 deduction. Their taxable income, then, would be $31,200.
Next, use the tax rate table to determine the employee’s tax rate. In this employee’s case, their taxable income puts them at the highest rate of $234 plus 4.95% of taxable income over $8,449.
- $20,800 – $8,449 = $12,351
- $12,351 x 4.95% = $611.37
- $611.37 + $234 = $845.37
This employee’s annual Missouri tax liability is $845.37. Divide that by 26 to get the amount for this pay period, which is $32.51.
If you withhold more than $9,000 in taxes a month for all employees, you’ll need to file and pay weekly. Withholding between $500 and $9,000 per month is filed and paid monthly while withholding between $100 a quarter and $499 a month is filed and paid quarterly.
Only employers withholding less than $100 a quarter can file and pay these taxes annually.
Monthly, quarterly, and annual filers get a pre-printed voucher booklet from the Missouri Department of Revenue to submit payments, or employers can use Form MO-941 or file their taxes electronically through MyTax.
Missouri maintains a helpful tax calendar each year listing all due dates for each type of filer and tax.
Missouri Unemployment Tax
Missouri’s unemployment tax is paid by employers only rather than withheld from employee paychecks. New employers pay 2.376%, while experienced employers pay between 0% and 6%, with their rate assigned by the state.
The state’s taxable wage base is $10,000 for 2024, meaning that employers only pay the tax on the first $10,000 an employee earns in a year.
So, if you’re a new employer in Missouri and you have an employee who makes $80,000 a year, you’ll only pay 2.376% of their first $10,000 earned, or $237.60.
Employers must report and file unemployment tax quarterly with Missouri by April 30th, July 31st, October 31st, and January 31st, and employers with at least 50 employees have to do it electronically with UInteract.
Local Missouri Taxes
Last up is local taxes, which employers are only responsible for if they have employees subject to St. Louis or Kansas City taxes.
St. Louis charges a 1% income tax on employee earnings, which you’ll withhold from their paychecks. As an employer, you’ll also need to pay a 0.5% payroll expense tax, which is only paid by employers.
Example:
An employee earns $1,000 in gross wages for this pay period. You’ll withhold $10 for their income tax portion, and you’ll pay $5 for your payroll expense tax portion.
Both taxes are filed and paid quarterly. Although you can pay St. Louis taxes online, you’ll need to mail in your filing to:
Gregory F. X. Daly, Collector of Revenue
Payroll Expense Tax Dept.
PO Box 66966
St. Louis, MO 63166-6966
Kansas City charges a 1% earnings tax to workers who live in or earn income in Kansas City. You’ll calculate the tax based on the employee’s gross wages, so $10 for $1,000 in income, for example.
Businesses must also pay a 1% earnings tax on their net income. So if you net $100,000 in a quarter, you’ll pay the city $1,000.
Both can be paid quarterly via the Quick Tax platform.
The Best Way to Run Missouri Payroll
If you’re overwhelmed about running Missouri payroll, don’t be. There’s an easier way to do it than running it manually: by using payroll software.
The best payroll software can become your own little payroll department, so to speak. It stays updated with state tax and payroll laws to keep your business compliant and make sure you’re paying employees and tax departments correctly.
Payroll software can also file new hire reports, send you reminders to update new hire information, calculate employee paychecks and withholding, and transfer money for taxes.
I rarely recommend that someone handles payroll manually. Even if you only have one employee, payroll software is a huge time saver, and you’ll be grateful you already have it set up as your business grows.
If you’re busy running the other aspects of your business—like marketing, sales, outreach, and optimizing your products and services—do yourself a favor and invest in a tool that does most of the challenging payroll work for you.
