Missouri does not tax most retirement pension income

Missouri excludes most pension and annuity income from state income tax. If you receive a pension from a government employer (federal, state, or local), a military pension, or a may have access to private pension, Missouri does not tax that money. This applies whether you retired in Missouri or moved there after retirement.

The main exception is if you have substantial non-pension income — such as wages, investment gains, or business income — that pushes you into a higher tax bracket. Your pension itself remains untaxed, but your other income is taxed at Missouri's standard rates, which range from 1.5% to 5.3% depending on your total income.

Social Security benefits are also not taxed by Missouri, even if they are taxed by the federal government. This makes Missouri one of the more pension-friendly states for retirees, though you should verify your specific situation because pension source and structure matter.

Key Takeaways

  • Missouri does not tax pensions from government employers, the military, or most private pension plans.
  • Social Security benefits are not taxed by Missouri, regardless of federal tax treatment.
  • If you have non-pension income (wages, investment income, rental income), that income is taxed at Missouri rates of 1.5% to 5.3%.
  • Some pension structures, such as certain deferred compensation plans, may have different tax treatment — check with your pension provider or a tax professional.

What counts as a pension under Missouri tax law

Missouri's pension exclusion covers income from a retirement plan, pension, or annuity that you receive after leaving employment. This includes pensions from state and local government jobs, federal civil service pensions, military retirement pay, and most private employer pension plans (defined-benefit plans).

The key is that the income must come from a formal retirement plan tied to your employment. Lump-sum distributions from 401(k) plans or IRAs are treated differently — they may be taxable depending on how you withdraw them and whether they are rolled over into another retirement account. If you take a direct withdrawal from an IRA or 401(k) before age 59½, you may owe federal tax and a 10% penalty, though Missouri itself does not add a state penalty.

Annuities purchased outside an employer plan (such as a commercial annuity you bought on your own) are also taxed differently. Only the earnings portion of each payment is taxable; the portion that represents your original investment is not. You should receive a statement from the annuity provider showing how much of each payment is taxable.

How to report pension income on your Missouri tax return

You report your pension income on the Missouri Form MO-1040 (the state income tax return), but you do not include it in your taxable income because of the pension exclusion. Your pension provider will send you a Form 1099-R each January showing the total amount you received the previous year.

When you file, you report the gross pension amount on your return but then subtract it using the pension exclusion. This means your taxable income for Missouri purposes is reduced by the full pension amount. If your only income is a pension, your Missouri taxable income will be zero, and you will owe no state tax.

If you have other income — such as part-time work, rental income, or investment income — you report that separately and pay tax on it at Missouri rates. Keep records of your pension statements and any other income documents, as the state may request them during an audit.

Non-pension income and how it affects your tax bill

Missouri taxes wages, self-employment income, interest, dividends, capital gains, and rental income at rates ranging from 1.5% to 5.3%, depending on your total income. If you have a pension plus other income, your pension remains untaxed, but the other income is taxed normally.

For example, if you receive a $30,000 annual pension and earn $15,000 from part-time work, Missouri does not tax the $30,000 but does tax the $15,000. Your tax bracket is determined by the $15,000, not the combined $45,000. This can result in a lower tax rate than if all your income were wages.

Missouri also offers a standard deduction (for tax year 2024, $13,610 for single filers and $27,220 for married filing jointly) that reduces your taxable income further. If your non-pension income is below the standard deduction, you may owe no Missouri tax at all.

Military pensions and federal employee pensions

Military retirement pay is fully excluded from Missouri income tax, regardless of rank, years of service, or the amount. This applies to active-duty retirees, Reserve and National Guard retirees (if they receive a pension), and survivors receiving military survivor benefit plan (SBP) payments.

Federal civil service pensions (FERS and CSRS) are also fully excluded. If you worked for a federal agency and receive a pension, Missouri does not tax it. The same applies to pensions from the Railroad Retirement Board.

If you receive a military or federal pension and also work part-time or have investment income, only that additional income is taxed by Missouri. The pension portion of your income remains completely exempt.

State and local government pensions

Pensions from Missouri state government, Missouri cities and counties, and other Missouri public employers are fully excluded from Missouri income tax. This includes pensions from public school teachers, police officers, firefighters, and other municipal workers.

Pensions from government employers in other states are also excluded by Missouri. If you retired from a California city government or a Texas state agency and moved to Missouri, your pension is not taxed by Missouri.

Some public employees receive both a pension and a deferred compensation plan (such as a 457 plan). Distributions from the deferred compensation plan may be treated differently than the pension itself — check with your employer's benefits office or a tax professional if you have both types of income.

Private employer pensions and 401(k) rollovers

Pensions from private employers (defined-benefit plans) are excluded from Missouri income tax. If you worked for a corporation or private business and receive a monthly pension check, Missouri does not tax it.

However, distributions from a 401(k) plan are treated as taxable income by both the federal government and Missouri, unless you roll them into an IRA or another may have access to retirement plan. If you take a direct withdrawal from a 401(k), that amount is subject to federal income tax and Missouri income tax.

If you roll a 401(k) into a traditional IRA and then take distributions from the IRA, those distributions are taxable by Missouri. If you roll it into a Roth IRA, may have access to distributions are not taxed by either the federal government or Missouri, but non-may have access to distributions may be taxable.

Frequently Asked Questions

Do I have to file a Missouri tax return if my only income is a pension?

No. If your only income is a pension, you have no Missouri taxable income and do not have to file a state return. However, if you have other income (wages, investment income, rental income), you must file and report that income, even if your pension is excluded.

Will my pension be taxed if I move to another state?

No. Missouri's pension exclusion applies to you as long as you are a Missouri resident when you receive the pension. If you move to another state, that state's tax laws apply to your pension going forward. Some states tax pensions; others do not. Check the tax rules of your new state before you move.

Is my 1099-R income the same as my taxable income?

No. Your 1099-R shows the gross amount you received, but because of Missouri's pension exclusion, little or none of it is taxable by Missouri. You report the full amount on your return and then subtract it as an exclusion. Your taxable income is what remains after the exclusion.

What if I receive both a pension and Social Security?

Both are excluded from Missouri income tax. Neither your pension nor your Social Security benefits are taxed by Missouri. If you have other income, only that income is taxed. Social Security may be taxed by the federal government depending on your total income, but Missouri does not tax it.

Do I need to report my pension income to Missouri if it is not taxed?

You should report it on your return if you are filing for any reason (such as to report other income or to claim a refund). Reporting the pension and then claiming the exclusion creates a clear record. If you are not filing for any other reason, you are not required to file, but keeping records of your pension statements is a good practice.