Tax rates are among the lowest in the country in Missouri. The nonpartisan Tax Foundation ranks Missouri’s business tax climate 14th and Illinois’ 36th among the 50 states.
Illinois and Missouri Business Tax Climate Index Rankings, 2019
Source: “2019 State Business Tax Climate Index” The Tax Foundation, Accessed 1/15/19.
Greater St. Louis stands as one of the most tax-friendly metro areas in the U.S. for doing business, even before additional incentives are taken into account.
Both Missouri and Illinois offer a variety of tax incentive programs to help lower operating costs for startups and expanding businesses. These include enterprise zones, workforce training programs and competitive tax credit programs as well as property tax abatements and workforce training grants.
|Corporate Income Tax||9.5% of Illinois taxable income (Federal taxable income with state modifications based on a one-factor in-state sales formula), which includes 7% state income tax and 2.5% personal property replacement tax (1.5% for S-Corps, partnerships and trusts).||6.25% of Missouri taxable income (Federal taxable income with state modifications based on an evenly weighted three-factor formula or an optional one-factor sales formula), with adjustments including deductibility of 50% of federal income tax. Decreases to 4.0% for tax years beginning on or after Jan. 1, 2020.|
|Local Income Tax||No local earnings taxes.||City of St. Louis residents, workers, and businesses pay a 1% earnings tax. Businesses pay based on the average allocation of gross receipts, payroll, and property in the City of St. Louis. Employers also pay a payroll tax of 0.5% (20% of which is credited against the 1% earnings tax due).|
|Franchise Tax||Initial franchise tax of 0.15% of paid-in capital, thereafter annual franchise tax of 0.1% of paid-in capital, minimum of $25, maximum of $2 million (plus 1/10 of 1% of the basis) per year.||No tax imposed.|
|Property Tax||Real property is assessed at 33 1/3% of market value. Personal property is not taxed. Business inventories are not taxed. Tax rates are the aggregate of local taxing districts.||Residential property is assessed at 19% of true or fair market value; commercial and industrial property at 32%; personal property at 33 1/3%. Business inventories are not taxed. Tax rates are the aggregate of local taxing districts and a .03% state tax.|
|Sales & Use tax||6.25% of purchase price of tangible personal property and selected services. 1% tax on qualifying food, drugs, and medical appliances. Local sales taxes also apply and vary by jurisdiction.||4.225% of purchase price of tangible personal property and enumerated services. In lieu of a regular use tax, a 4% special use tax is imposed on motor vehicles, trailers, boats, and outboard motors. Local sales taxes also apply and vary by jurisdiction.|
Source: “2019 State Tax Handbook” CCH, 2018.
For a metropolitan area its size, St. Louis has very competitive wage rates, representing a cost advantage for firms operating in this market. The average annual wage for workers in the St. Louis area in May 2017 was $49,180, which is below the U.S. average of $50,620.