Most St. Louis area business owners know Missouri has a state income tax. Fewer realize that if your business operates inside the city limits of St. Louis, there’s a separate local tax sitting on top of that, and it applies whether you live in the city or not.
The St. Louis earnings tax is a 1% tax on wages earned inside the city and on the net profits of businesses operating there. On the surface, 1% sounds small. But between employees, payroll withholding obligations, business filing requirements, and the compliance headaches that come with missing any of it, the real cost tends to be higher than that number suggests.
If you have an office in St. Louis, employees who work in the city, or you’re thinking about setting up there, here’s what you actually need to know.
The St. Louis Earnings Tax Applies to Work Done Inside City Limits
The earnings tax is collected by the City of St. Louis, not St. Louis County, and the boundary matters a lot more than most people expect. The city and the county are separate jurisdictions in Missouri, so you can have an office on one side of a street and owe the tax, and on the other side you don’t.
According to the City of St. Louis Collector of Revenue, the earnings tax applies to three groups: residents of St. Louis who earn wages anywhere, non-residents who earn wages inside the city limits, and businesses (corporations, partnerships, sole proprietors) that operate within the city. The rate for all three groups is 1% of earned income or net profits from city business operations.
The part that surprises most people: if you have an employee who commutes into the city five days a week, you owe withholding on the portion of their compensation attributable to work performed inside St. Louis city limits on those days, even if that employee lives in Chesterfield or Edwardsville or anywhere else outside city limits.
Who Pays the St. Louis Earnings Tax?
There are effectively three taxpayer categories, and many businesses fall into more than one.
Residents of St. Louis City pay 1% on all wages and self-employment income, regardless of where the work is performed. So if someone lives in the city and works remotely for a company headquartered in Chicago, they still owe the earnings tax on that income.
Non-residents who work inside the city pay 1% on wages earned within city limits. If a non-resident employee works both inside and outside the city, the tax is apportioned to only the income earned on the days they physically worked inside St. Louis. Remote days from home, if home is outside the city, do not count.
Businesses operating in the city pay 1% on net profits attributable to city operations. If your business operates in multiple locations, only the portion of net profit tied to city activity is subject to the tax, calculated using an apportionment formula based on sales, payroll, and property inside the city.
Does the Earnings Tax Apply to Remote Workers?
This question has become a lot more complicated since 2020, and the short answer is: it depends on where the work is actually performed.
For the employee side, the St. Louis earnings tax follows a physical presence standard. If your employee is sitting at a desk in a St. Louis city office, the wages earned that day are subject to the 1% withholding. If that same employee works from home in Kirkwood on a Wednesday, no earnings tax applies to that day’s wages.
This means employers with hybrid schedules need to track which days employees physically work inside the city versus outside it. It’s not the most convenient recordkeeping requirement, but it’s the correct way to calculate withholding, and it’s the number the City of St. Louis expects to see if they ever audit your payroll records.
For fully remote employees who never set foot in a St. Louis city office, no earnings tax withholding is required on their wages, even if your business address is inside the city.
How St. Louis Earnings Tax Withholding Works for Employers
If you have employees who work inside St. Louis city limits, you are required to register as an employer with the City of St. Louis and withhold the 1% earnings tax from each paycheck, much like you withhold for state and federal income tax.
Employer withholding and payroll expense taxes are generally filed and paid quarterly using the W-10 (payroll expense tax) and P-10 (earnings tax withholding) forms, with an annual reconciliation return filed at the end of the year. If you need additional time to file, Form E-8 is the extension request form available through the City of St. Louis. W-2 reporting is handled separately. Filing and payment are handled through the City of St. Louis Collector of Revenue’s office, separately from your Missouri state filings.
One thing that catches new employers off guard: you need to register before you start withholding, not after. If your business moved into a St. Louis city location or hired a city-based employee without registering, the catch-up process involves filing back returns and possibly paying interest on late deposits. Getting registered at the start, before the first paycheck, saves a meaningful amount of cleanup work later.
What the Business Earnings Tax Return Looks Like
Businesses operating inside St. Louis city limits file a separate business earnings tax return each year, in addition to their Missouri state return. The city return is based on net profits attributable to city operations, calculated after allowable deductions but before the city tax itself.
For businesses that operate entirely within the city, the calculation is straightforward: 1% of net profit. For businesses with operations inside and outside the city, the apportionment formula matters. The city uses a three-factor formula weighting sales, payroll, and property inside the city against totals. Businesses get this calculation wrong more often than you’d think, usually by either over-including out-of-city revenue or under-allocating payroll.
The business earnings tax return is due April 15 for calendar-year filers, aligned with your federal return deadline. Extensions are available, but they extend the time to file, not the time to pay. If you owe, the payment is still due April 15.
What Happens If You’ve Been Missing the Earnings Tax?
The City of St. Louis does enforce the earnings tax, and the most common way businesses get caught is through a routine audit cross-referencing state payroll records against city filings. If you’ve had employees working in the city and haven’t been withholding, the liability includes back taxes, interest, and potential penalties.
The good news is that the city has processes for voluntary disclosure, which typically results in lower penalties than being caught through an audit. If you suspect you’ve been out of compliance, the cleanest path is to get ahead of it proactively, calculate what’s owed, and file corrected returns before a notice arrives.
We work through exactly this kind of situation with St. Louis area businesses on a fairly regular basis. The numbers to sort out are usually manageable once someone sits down and actually works through them. The harder version is the one where you wait for a city notice to force the conversation.
Does St. Louis County Have an Earnings Tax?
No. St. Louis County does not have an earnings tax, which is one of the most common points of confusion for business owners in the region.
Missouri has what’s called an independent city structure, meaning the City of St. Louis is not part of St. Louis County. They are completely separate jurisdictions. A business operating in Clayton, Creve Coeur, Chesterfield, or any other St. Louis County municipality owes no city earnings tax to St. Louis City. Only businesses and workers inside the geographic boundaries of St. Louis city itself are subject to the tax.
This also means that a St. Louis city resident who works exclusively in St. Louis County owes earnings tax to the city on their wages, because the tax follows residency for city residents. The city-county split creates some unusual situations, and it’s worth confirming exactly which side of the line your office is on if there’s any question.
St. Louis Earnings Tax and Your Overall Missouri Tax Picture
The St. Louis earnings tax is on top of, not in place of, Missouri state income tax. Missouri taxes individual income at a top rate of 4.7% for 2025, per Missouri’s phased income tax reduction law, so the combined rate for a St. Louis city worker includes state plus city taxes on wages earned in the city.
For businesses, the earnings tax also layers on top of Missouri corporate or pass-through income tax. The city return and the state return are filed separately, on different forms, with different agencies. If your business runs payroll in multiple states or has operations across Missouri and Illinois, getting the apportionment right on all of these returns is one of the more nuanced parts of your annual tax picture.
If you want to make sure your Missouri and Illinois tax filings are coordinated correctly, that’s exactly what our business tax planning work covers, and we can walk through where the St. Louis earnings tax fits into the whole picture.
If you’ve got questions about the St. Louis earnings tax, want to make sure your withholding is set up correctly, or need help working through a back-filing situation, reach out to the team at Thompson Flaherty.
The first call is free, and we’d genuinely rather sit down and talk it through with you than have you discover the problem in the middle of an audit.
