What Income is Taxable in Missouri?

In Missouri, unless specifically exempted by legislation, all income is subject to taxation. This includes earnings from salaries, wages, gratuities, commissions, bonuses, and other payments made in exchange for services. Additionally, it covers earnings from side jobs, investments, rental income, and any other sources of income.

Missouri has a progressive income tax system with four tax rates for the tax year 2021. Depending on your income level, the tax rates range from 1.5% to 5.4%. The following are the tax rates for single filers:

1.5% of the initial $1,058 of taxable income between $1,059 and $2,116 in taxable income, there is a 2.0% tax rate. between $2,117 and $3,174 in taxable income: 2.5% 3.0% on taxable income in the range of $3,175 and $4,232 – 3.5% on taxable income in the $4,233–$5,290 range Between $5,291 and $6,348 in taxable income, 4.0% between $6,349 and $7,406 in taxable income: 4.5% between $7,407 and $8,464 in taxable income: 5.1% – 5.4% of all taxable income over $8,465

The employee and employer portions of Social Security and Medicare taxes must be paid if you are a self-employed person. This is referred to as the self-employment tax, and the current rate is 15.3% of your net self-employment income. Your federal and state income taxes are in addition to the self-employment tax.

Because your employer covers half of your Social Security and Medicare taxes when you work for someone else, the self-employment tax is so high. However, if you work for yourself, you are in charge of paying both of these taxes. This implies that you are responsible for covering the entire 15.3%.

If you are self-employed, the amount of taxes you must pay depends on your income and deductions. Certain company expenses are deductible from your income, which can lessen your tax liability by lowering your taxable income. In the event of an audit, it is crucial to keep precise documents and track of your expenditures.

In conclusion, unless specifically exempted by legislation, all income in Missouri is taxable. For the fiscal year 2021, the state has a progressive income tax system with four tax rates. The self-employment tax, also referred to as the employer and employee portions of Social Security and Medicare taxes, must be paid if you are a self-employed person. You are liable for both parts of these taxes, which results in a significant self-employment tax. If you are self-employed, the amount of taxes you must pay depends on your income and deductions.