If you are considering retirement in Missouri, it is important to know what taxes you may be subject to paying. With taxes being a major part of seniors' expenses, knowing how much a state taxes what can be a major consideration in choosing a state in which to retire. It's also helpful to know what kind of exemptions and deductions senior citizen taxpayers can claim. Here are some things to look at if you're considering retirement in Missouri.
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- Sales Tax
- Missouri taxes some purchases other states do not, including food. Prescription drugs, though, are exempt, according to the Retirement Living Information Center. The state's revenue department says the basic sales tax rate is 4.225 percent, though counties can add on. In some counties, the total sales tax went as high as 7.465 percent in 2014.
- Income Tax
- Although this tax isn't as important to seniors living on retirement benefits and pensions, those – including Social Security – count as income in Missouri. It's worth noting that the state's top tax bracket is 6 percent on yearly income of $9,001 or more, according to Bankrate, which rates Missouri as 18th-best in the nation on tax rates for retirees.
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- Tax Exemptions -
Here is where seniors and other retirees can save money, as there are a number of breaks those 62 and older can claim. Seniors and some disabled people can claim credit toward real estate taxes or rent they've paid in a given year – up to $750 for renters and $1,100 for owners of the homes in which they lived, according to the state revenue department. However, renters living in a facility that does not pay property taxes cannot claim a property tax credit. Missouri is one of 14 states that taxes Social Security income. However, those 62 and older can claim deductions on Social Security benefits and nonprivate retirement benefits, to the extent those benefits are part of the individual's federal adjusted gross income, the Retirement Living Information Center says. Social Security Disability payments can also be deducted. When it comes to property taxes, a homestead exemption of up to $15,000 can be claimed, TopRetirements.com says. Up to 65 percent of public pension and 15 percent of retired military pay can be deducted from taxes, depending on circumstances, according to the state revenue department. However, the state has been chipping away at that percentage, and military pensions will be fully exempt from state tax by January 1, 2016, according to the state veterans' commission.
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