Does Missouri charge sales tax on services?
by November 2, 2023
The majority of U.S. states require merchants to charge sales tax on tangible personal property (TPP), otherwise known as physical goods. Many states also implement sales and use tax on digital goods and SaaS. Because the economy has shifted over time from a manufacturing economy to a service economy, states are now looking to generate revenue by taxing services.
Here’s what merchants need to know about taxing services in the state of Missouri, which has a state sales tax rate of 4.225%.
Does Missouri charge sales tax on services?
Services in Missouri are generally not taxable, but there are a few exceptions:
- Admission and seating accommodations for amusement parks, entertainment, recreation, and athletic events
- Utilities including electricity, water, and gas. There is a specific exemption for sale of utilities for domestic use.
- Local and long distance telecommunication services. This does not include internet or interactive computer services.
- Services for the transmission of message of telegraph companies
- Intrastate tickets for railroad, express car, boat, airplane, buses, and trucks as are licensed by the Division of Motor Carrier and Railroad Safety, engaged in the transportation of persons for hire
- Labor used to fabricate a product that will be sold at retail. A fabricator cannot separately state the labor and claim an exemption on that labor as the sale of a non-taxable service.
Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be subject to state sales tax. For an in-depth look at Missouri sales tax, TaxJar’s guide to sales tax in Missouri and the Missouri Department of Revenue has more details.
How to stay compliant with sales tax when you sell services
Managing all the moving parts of sales tax can be challenging. Are accounting services taxed? What about hair care or car maintenance? They may not be taxed in your state today, but sales tax laws change all the time. TaxJar makes it easier for you to stay current with it all, especially as you scale your business across states.
If you need to charge sales tax on services, TaxJar takes all of these state laws into account and makes your job simple. To learn more about TaxJar and get started automating your sales tax compliance, start a free, 30-day trial today.
