Withholding applies to wages of residents, regardless of where earned and to wages of nonresidents for income earned in Missouri. The term “wages” for Missouri income tax withholding purposes has the same meaning as it has for federal withholding. Wages include all pay given to an employee for services performed. The pay may be in cash or in other forms. Wages include salaries, vacation allowances, bonuses, and commissions, regardless of how measured or paid.
Generally, employees who are subject to federal income tax withholding are also subject to state income tax withholding. Agricultural, domestic, and most other employees who are exempt from federal withholding are also exempt from state withholding. Changes to the Internal Revenue Code are automatically adopted by Missouri. Thus, compensation that is subject to federal withholding is also subject to state withholding.
Beginning in tax year 2019, the DOR removed the federal tax deduction from the withholding tax calculation. This change may result in a small increase to the amount withheld from employees’ paychecks. Any withholding in excess of the tax owed will be refunded after the taxpayer files the individual income tax return.