Missouri does not levy its own estate tax.1 Missourians may be liable for the federal estate tax, though, if their estates are large enough. This guide walks Show-Me State residents through what they need to be aware of regarding the estate tax to make sure their estate plan is thorough and adequately protects their assets. Finding a financial advisor can make estate planning easier. SmartAsset can help you find the right financial advisor for you with our free financial advisor matching service.
Missouri Estate Tax
Missouri is one of the 38 states in the nation that does not levy its own estate tax.
What Is the Estate Tax?
Sometimes referred to as the “death tax,” the estate tax applies to the estate of someone who has recently died. The tax is levied before the money and assets in the estate are passed on to the person’s legally designated heirs. The tax only applies to estates reaching a certain threshold. The government levying the tax determines the threshold.
The inheritance tax and the estate tax are not the same. States levy the inheritance tax on assets after they have already been passed on to a person’s heirs.
Missouri Inheritance and Gift Tax
Missouri also does not have an inheritance tax. There is a chance, though, that you may owe inheritance taxes to another state. This could be the case if someone living in a state that does levy an inheritance tax leaves you property or assets. Pennsylvania, for instance, has an inheritance tax that applies to all property owned by its residents, even if the inheritor of that property lives in another state.2 If you inherit something from someone living in a different state, make sure to check local laws so you don’t accidentally miss a tax payment.
Missouri has no gift tax. The federal gift tax has a $16,000 yearly exemption per gift recipient for 2022, increasing to $17,000 in 2027. If you gift more than $17,000 to any one person in a single year, you must report the gift on your tax return. The amount you give over $17,000 counts against your $12.92 million gift tax exemption. It also lowers your federal gift tax exemption.
Federal Estate Tax
Missouri does not have an estate tax, but the federal government will levy an estate tax if your estate is worth enough. The exemption is $12.06 million for deaths in 2022. The exemption increases to $12.92 million in 2023. The exemption for the federal estate tax has portability. This means that a married couple can, with the proper legal steps, protect up to $25.84 million of their estate when they both die.3
An estate exceeding the exemption is subject to a progressive estate tax. The top rate is 40%.
Here is an example: Let’s say your estate is worth $16.92 million. First, subtract the $12.92 million exemption, leaving you with a $4 million taxable estate. That places you in the top tax bracket. You’ll owe a $345,800 base payment on the first $1 million and a 40% payment on the remaining $3 million, which comes to $1.20 million. Add that to the base payment and you are left with a total estate tax bill of $1,545,800.4
FEDERAL ESTATE TAX RATES
| Taxable Estate* | Base Taxes Paid | Marginal Rate | Rate Threshold** |
| $1 – $10,000 | $0 | 18% | $1 |
| $10,000 – $20,000 | $1,800 | 20% | $10,000 |
| $20,000 – $40,000 | $3,800 | 22% | $20,000 |
| $40,000 – $60,000 | $8,200 | 24% | $40,000 |
| $60,000 – $80,000 | $13,000 | 26% | $60,000 |
| $80,000 – $100,000 | $18,200 | 28% | $80,000 |
| $100,000 – $150,000 | $23,800 | 30% | $100,000 |
| $150,000 – $250,000 | $38,800 | 32% | $150,000 |
| $250,000 – $500,000 | $70,800 | 34% | $250,000 |
| $500,000 – $750,000 | $155,800 | 37% | $500,000 |
| $750,000 – $1 million | $248,300 | 39% | $750,000 |
| Over $1 million | $345,800 | 40% | $1 million |
*The taxable estate is the total above the federal exemption of $12.92 million.
**The rate threshold is the point at which the marginal estate tax rate kicks in.
Overall Missouri Tax Picture
Missouri is moderately-tax friendly for retirees. The state fully taxes withdrawals from retirement accounts like 401(k) plans and income from private pension funds. It partially taxes Social Security benefits and income from public pensions. Social Security income is fully exempted for seniors with adjusted gross incomes of less than $85,000 ($100,000 for joint filers). Public pension income is eligible for an annual exemption of up to $6,000 ($12,000 for joint filers) if you have a MAGI of no more than $25,000 for single filers and $32,000 for joint filers. The state taxes any public pension income above that amount. Missouri has a progressive income tax, with rates ranging from 0% to 5.40%
Missouri’s property tax rates fall below the national average. The average effective rate is 0.88%. There is also a property tax credit for people who are at least 65 and own and occupy their homes. The credit is worth up to $1,100 for owners and $750 for renters. Full-year owners must have total income of less than $30,000 ($34,000 for joint filers). For part-year owners or renters, the income cap is $27,500 for single filers and $29,500 for joint filers.
Sales tax in Missouri is higher than the national average. The statewide rate is just 4.23%, but with local taxes the total rate can range up to 5.76%.
Estate Planning Tips
- Estate planning, like all types of financial planning, can get complicated. It might make sense for you to find a financial advisor to guide you through the process. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- While you can certainly try to plan your estate on your own, there are some very serious risks to DIY estate planning. Strongly consider getting help from an advisor or a lawyer, especially if your estate is complicated.
Sources
- “Estate Tax – Missouri Estate Tax Filings No Longer Required.” Missouri Department of Revenue. https://dor.mo.gov/taxation/individual/tax-types/estate.html.
- Pennsylvania Department of Revenue. “Inheritance Tax.” https://www.revenue.pa.gov:443/TaxTypes/InheritanceTax/Pages/default.aspx.
- “Frequently Asked Questions on Estate Taxes.” Internal Revenue Service, August 9, 2023. https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-estate-taxes.
- “Estate Tax.” Internal Revenue Service, October 26, 2022. https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax.
Photo credit: ©iStock.com/Davel5957, ©iStock.com/Goodluz