Sales/Use Tax

The 4.225 percent state sales/use tax rate in Missouri is lower than the rates in 35 other states.  Missouri communities have the option of adopting a local sales tax, generally ranging from one-half to one percent.  Counties may also adopt a sales tax generally ranging from one-fourth to one percent. 

Use tax is similar to sales tax, but is imposed when tangible personal property comes into the state and is stored, used or consumed in Missouri.  Communities have the option of adopting a local use tax equal to the local sales tax for that community.

Missouri has responded to the needs of industry by providing eighteen major exemptions from sales/use taxes:

1. Machinery and equipment used to establish a new, or expand an existing manufacturing facility are tax-exempt, provided such machinery/equipment is used directly to manufacture a product ultimately intended for sale.
2. Replacement machinery and equipment used directly in manufacturing a product ultimately intended for sale.
3. Machinery, equipment and devices which abate air pollution.  To qualify for this exemption, a company need only have the appropriate state governmental agency certify that the equipment is pollution control equipment.
4. Machinery, equipment and devices that abate water pollution.  To qualify for this exemption, a company need only have the appropriate state governmental agency certify that the equipment is pollution control equipment.
5. For tax periods beginning after December 31, 1995, machinery and equipment used to establish a new, or replace or expand an existing material recovery processing plant.  The plant must convert recovered materials into a new product or different form.  After August 28, 1996, this exemption includes equipment used to transport recycled materials to the recycling center (not including motor vehicles).
6. All materials and supplies used to install this tax-exempt machinery and equipment also may be purchased tax-exempt.
7. Sales tax is not imposed on electricity consumed in the manufacturing process provided the cost of the electricity exceeds ten percent of total production costs.  The cost of electrical energy consumed in the manufacturing process cannot be included in total production costs to qualify for the exemption.  Electricity used for non-manufacturing purposes, such as lighting and heating, is taxable.
8. Electricity or gas, whether natural, artificial or propane, is tax-exempt when used in connection with basic steel making.
9. For tax periods beginning after December 31, 1995, electricity which is converted to stored chemical energy for providing an initial charge in lead-acid storage batteries during the manufacturing process, if this electricity is separately metered.  This exemption does NOT apply to any local sales taxes.
10. Anodes used in manufacturing or other types of production, with a useful life of less than one year, may also be acquired tax-exempt.
11. For tax periods beginning after December 31, 1995, computer, computer software, and computer security systems purchased for use by architectural, engineering, or accounting firms headquartered in Missouri.
12. Exempts nonreusable items furnished to hotel or motel guests from sales and use tax.
13. Exempts samples and materials used to manufacture prescription drug samples that can be dispensed by an authorized practitioner.
14. Exempts slagging materials, firebrick and other products (including gases) that are blended with, or become ingredients or other component parts of steel products.
15. Exempts electrical energy meeting certain criteria whether facilities are leased or owned.
16. Exempts electrical energy used for cold storage at production facilities.
17. Exempts sales of barges used in interstate waterways for transportation of property or cargo.
18. Exempts sales of “livestock” (the definition of which is expanded to include goats, horses, other equine and rabbits).  This exemption will also apply to medications, vaccines, feed additives, feed and bedding purchased for these animals if they are used in the production of food or fiber.

Business and Community Services
301 W. High Street, Rooms 720, 770  Jefferson City, Missouri 65102
Tel: 800-523-1434    Fax: 573-751-7384   Email: missouridevelopment@ded.mo.gov