Our Tax-Friendly Metro Offers Businesses More for Their Money
Greater St. Louis stands as one of the most tax-friendly metro areas in the United States for doing business, even before additional incentives are considered.
Businesses in Missouri enjoy some of the lowest tax rates in the country — the state offers the 8th best corporate tax rate in the United States. The nonpartisan Tax Foundation ranks Missouri’s business tax climate 12th and Illinois’ 36th among all 50 states.
As a whole, the St. Louis region’s competitive wage rates represent a significant cost advantage for firms operating in this market. The average annual wage for workers in the St. Louis area in May 2020 was $54,210, below the United States average of $56,310.
| Tax | Illinois | Missouri |
|---|---|---|
| Corporate Income Tax | 9.5% of Illinois taxable income (federal taxable income with state modifications based on a one-factor in-state sales formula), which includes 7% state income tax and 2.5% personal property replacement tax (1.5% for S-Corps, partnerships and trusts). |
4% of Missouri taxable income based on a single factor, market-based apportionment corporate income tax model based only on sales. |
| Local Income Tax |
No local earnings taxes. |
City of St. Louis residents, workers and businesses pay a 1% earnings tax. Businesses pay based on the average allocation of gross receipts, payroll and property in the City of St. Louis. Employers also pay a payroll tax of 0.5% (20% of which is credited against the 1% earnings tax due). |
| Franchise Tax | Initial franchise tax of 0.15% of paid-in capital, thereafter annual franchise tax of 0.1% of paid-in capital, minimum of $25, maximum of $2 million. Illinois began to phase out this tax in 2020 and will completely repeal it after 2023. | No tax imposed. |
| Property Tax | Real property is assessed at 33.3% of market value. Personal property is not taxed. Business inventories are not taxed. Tax rates are the aggregate of local taxing districts. | Residential property is assessed at 19% of true or fair market value; commercial and industrial property at 32%; personal property at 33.3%. Business inventories are not taxed. Tax rates are the aggregate of local taxing districts and a 0.03% state tax. |
| Sales and Use Tax | 6.25% of purchase price of tangible personal property and selected services. 1% tax on qualifying food, drugs and medical appliances. Local sales taxes also apply and vary by jurisdiction. | 4.225% of purchase price of tangible personal property and enumerated services. In lieu of a regular use tax, a 4% special use tax is imposed on motor vehicles, trailers, boats and outboard motors. Local sales taxes also apply and vary by jurisdiction. |
Illinois and Missouri Business Tax Climate Index Rankings (2021)
| State | Overall Rank | Corporate Tax Rate | Individual Tax Rate | Sales Tax Index Rank | Unemployment Ins. Tax Index Rank | Property Tax Index Rank |
|---|---|---|---|---|---|---|
| Illinois | 36th | 36th | 13th | 38th | 48th | 43rd |
| Missouri | 12th | 3rd | 23rd | 24th | 8th | 7th |
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