Missouri Earnings Tax Explained: KC and STL 1% Income Tax
Kansas City and St. Louis are the only two cities in Missouri that levy an earnings tax, and it’s one of the most important factors in where you buy a home. Both charge 1% on all income for residents and on locally-sourced income for non-residents who work in the city. For a household earning $100,000, that’s $1,000/year — enough to affect your housing budget and neighborhood choice. Here’s how it works and how to factor it into your buying decision.
How the Earnings Tax Works
| Scenario | Where You Live | Where You Work | Tax Owed | Annual Cost ($80K salary) |
|---|---|---|---|---|
| Live and work in KC MO | KC MO | KC MO | 1% on all income | $800 |
| Live in KC MO, work remotely | KC MO | Anywhere | 1% on all income | $800 |
| Live in KC MO, work in Overland Park | KC MO | KS | 1% on all income (residence-based) | $800 |
| Live in Lee’s Summit, work in KC MO | MO suburb | KC MO | 1% on KC-sourced income only | $800 |
| Live in Overland Park, work in KC MO | KS | KC MO | 1% on KC-sourced income only | $800 |
| Live in Lee’s Summit, work remotely | MO suburb | Anywhere | $0 | $0 |
| Live in Overland Park, work in OP | KS | KS | $0 | $0 |
The key distinction: residents of KC MO pay 1% on ALL income regardless of where they earn it. Non-residents only pay on income earned within KC MO city limits. This makes living just outside city limits (North KC, Lee’s Summit, Gladstone) financially advantageous for people who don’t work in KC MO — especially remote workers.
St. Louis Earnings Tax
St. Louis City has an identical 1% earnings tax with the same rules. St. Louis County does NOT have it. This is a major factor in the STL city vs county decision:
| Scenario | Where You Live | Tax Owed | Notes |
|---|---|---|---|
| Live in STL City, work anywhere | City of St. Louis | 1% on all income | Residence-based, same as KC |
| Live in Clayton, work in STL City | STL County | 1% on STL-sourced income | Pay only on city employment |
| Live in Kirkwood, work in Kirkwood | STL County | $0 | County has no earnings tax |
| Live in STL City, work remotely | City of St. Louis | 1% on all income | Remote workers still pay |
Impact on Home Buying: The Real Numbers
| Household Income | Annual Earnings Tax | Monthly Cost | 10-Year Cost | 30-Year Cost |
|---|---|---|---|---|
| $50,000 | $500 | $42 | $5,000 | $15,000 |
| $75,000 | $750 | $63 | $7,500 | $22,500 |
| $100,000 | $1,000 | $83 | $10,000 | $30,000 |
| $150,000 | $1,500 | $125 | $15,000 | $45,000 |
| $200,000 | $2,000 | $167 | $20,000 | $60,000 |
Over 30 years of homeownership, the earnings tax adds $15,000-$60,000 to the cost of living in KC or STL city versus a suburb. But before you run to the suburbs, consider what you’d lose: Westport walkability, Crossroads galleries, Tower Grove restaurants, short downtown commutes, and housing that’s often $50,000-$100,000 cheaper than suburban equivalents. The tax is real, but it’s not the only factor.
Earnings Tax vs Home Price: The Full Picture
Here’s where the math gets interesting. KC MO city homes are often significantly cheaper than suburban equivalents:
| Comparison | KC City (Waldo) | MO Suburb (Lee’s Summit) | KS (Overland Park) |
|---|---|---|---|
| Median Home | $290,000 | $335,000 | $380,000 |
| Monthly Mortgage (7%, 30yr, 5% down) | $1,832 | $2,116 | $2,400 |
| Monthly Property Tax | $266 | $274 | $421 |
| Monthly Earnings Tax ($80K) | $67 | $0 | $0 |
| Total Monthly Housing | $2,165 | $2,390 | $2,821 |
| Annual Total | $25,980 | $28,680 | $33,852 |
Even with the earnings tax, Waldo (KC city) is $225/month cheaper than Lee’s Summit and $656/month cheaper than Overland Park because the home prices are lower. The earnings tax narrative is real, but it often obscures the bigger picture: cheaper city homes can more than offset the 1% tax.
Voter Renewal Requirement
Kansas City’s earnings tax must be renewed by voters every 5 years. It has been renewed every time since its inception, most recently in 2021 with about 75% approval. The tax generates roughly 40% of KC’s general fund revenue — roughly $300 million annually. If it were ever voted down, the city would face catastrophic budget cuts to police, fire, parks, and infrastructure.
Related: Wyoming No Income Tax Benefits Explained: What Homeowners Need to K…
St. Louis’s earnings tax was also subject to periodic votes and has been similarly renewed. Both taxes are politically entrenched and unlikely to disappear.
Related: Missouri’s Zero Transfer Tax Explained: What Buyers and Sellers Save
How to File and Pay the Earnings Tax
- KC MO residents: File Form RD-109 annually with the KC Revenue Division. Most employers withhold automatically if your work address is in KC MO. If not withheld, you’ll pay quarterly estimates or a lump sum by April 15.
- Non-residents working in KC MO: Your employer should withhold if they have a KC MO office. If not, you must file and pay directly.
- STL residents: File the earnings tax return with the St. Louis Collector of Revenue. Similar process to KC.
- Self-employed: You’re responsible for calculating and paying quarterly estimates. The 1% applies to net self-employment income from KC or STL sources (or all income if you’re a resident).
- Remote workers: If you’re a KC MO or STL City resident working remotely for an out-of-area employer, you still owe the earnings tax on all income. Your employer won’t withhold it — you must file and pay directly.
Strategies for Minimizing the Earnings Tax Impact
- Live in a Missouri suburb: Lee’s Summit, Liberty, North KC, Gladstone — all outside KC city limits. No earnings tax, lower property taxes than Kansas, and good school districts.
- Remote work advantage: If you work remotely for an employer outside KC/STL, living in a suburb means $0 earnings tax. This is the cleanest tax situation in the KC metro.
- Deduct it on federal taxes: The earnings tax is deductible as a state/local tax if you itemize (subject to the $10,000 SALT cap). For homeowners in the 22% bracket, this effectively reduces the cost from $1,000 to $780 on $100K income.
- Factor in home prices: Don’t move to a suburb solely to avoid the earnings tax if the suburb’s higher home prices cost more than the tax saves. Run the full comparison. Use our see how much you can buy.
Visit the Missouri real estate hub for more guides, and use our run the numbers to model different scenarios with the earnings tax factored into your monthly budget.
Related Missouri Guides
- Best Moving Companies in Missouri 2026
- Down Payment Assistance Programs in Missouri 2026: Grants, Loans & How to Qualify
- Moving to Columbia MO in 2026: Cost of Living, Housing, and What to Know
- Kansas City vs St. Louis: Where to Buy a Home in 2026
- Missouri Property Tax System Explained: What Homebuyers Need to Know
Frequently Asked Questions
Can I avoid the KC earnings tax?
Yes, by living outside KC MO city limits AND not working within KC MO. Missouri suburbs like Lee’s Summit, Liberty, and Gladstone are outside city limits. Kansas cities like Overland Park avoid it too. Remote workers living outside KC MO who work for out-of-area employers pay $0.
Is the earnings tax deductible?
It’s deductible as a state/local tax on your federal return if you itemize (subject to the $10,000 SALT cap). For most homeowners, this offsets 10-22% of the cost depending on your tax bracket. On a $100K income, the $1,000 tax effectively costs $780-$900 after the federal deduction.
Does St. Louis have the same earnings tax?
Yes, St. Louis City levies an identical 1% earnings tax with the same rules. St. Louis County does NOT have it. This is a major reason many STL residents choose the county over the city — though city home prices are often $50,000-$100,000 lower, which can offset the tax.
Do remote workers pay the KC earnings tax?
Only if they’re KC MO residents. The earnings tax is residence-based for city residents — you pay on all income regardless of where it’s earned. A remote worker in KC MO earning $120K from a San Francisco employer pays $1,200/year in KC earnings tax. Move to Lee’s Summit (15 minutes away) and that drops to $0.
How much revenue does the earnings tax generate?
Roughly $300 million annually for Kansas City — about 40% of the general fund. For St. Louis City, it’s similarly significant. These funds support police, fire, parks, streets, and basic city services. Eliminating the tax without replacement revenue would be devastating to city operations.
What happens if I don’t pay the KC earnings tax?
The KC Revenue Division will send notices and eventually assess penalties and interest. Unpaid earnings tax can result in liens against your property, wage garnishment, and referral to collections. The penalties are 1% per month on unpaid tax plus 5% per month for failure to file (up to 25%). File on time even if you can’t pay the full amount — the filing penalty is harsher than the payment penalty. Use our estimate sale proceeds to factor all costs into your selling decision.
Does the earnings tax apply to retirement income?
No. Social Security, pension distributions, and retirement account withdrawals are generally not subject to the KC or STL earnings tax. The tax applies to “earned income” — wages, salaries, commissions, and self-employment income. This makes KC and STL more attractive for retirees than the earnings tax initially suggests. A retiree living on $60,000/year in Social Security and pension income pays $0 in earnings tax. Visit our Missouri real estate hub for more guides.
Compare options: 15-Year vs 30-Year Mortgage Compared