Key figures
Missouri advisory
2026, with sources
- R&D credit
- 15%Of additional qualified research expenses; 20% with a Missouri college or university. Authorized by the Department of Economic Development.
- R&D credit carryforward
- 12 yearsUnused credit carries forward; up to 100% of a certificate may be sold or transferred.
- R&D credit sunset
- Dec 31, 2028Unless reauthorized. $5 million of each year’s pool is reserved for minority, women’s and small businesses until Nov 1.
Credits and capital gains
Missouri revived a research credit for tax years beginning in 2023: 15% of additional qualified research expenses (20% when the research is done with a Missouri college or university), capped at $300,000 per taxpayer a year and $10 million statewide. It is administered by the Department of Economic Development, not claimed on the return alone, and it sits alongside the federal R&D tax credit rather than replacing it.
The bigger 2025 change is on the founder side. HB 594 lets individuals subtract all federally reported capital gains starting with tax year 2025, so a Missouri resident’s exit gain is outside Missouri income tax regardless of QSBS status. The same law gives corporations a 100% capital gains subtraction, but only from the tax year after the top individual rate falls to 4.5% or lower; at 4.7% for 2026, it has not started.
The income tax vote in 2026
In 2026 the legislature sent voters Amendment 5 (HJR 173 and 174), which would have let future legislatures broaden the sales tax in order to phase out the individual income tax. It was on the August 4, 2026 primary ballot and voters rejected it, so the graduated individual rates topping out at 4.7% and the 4% corporate rate stand for 2026. The amendment did not address the corporate income tax.
Where founders go wrong in Missouri
A first Missouri hire creates withholding and unemployment obligations and, through the employee’s activity, an income-tax filing obligation. The state pieces are straightforward; the city ones are where companies slip.
- Hiring in Kansas City or St. Louis and running payroll without the 1% city earnings tax set up.
- Missing St. Louis’s 0.5% payroll expense tax, which the employer pays on top of withholding.
- Assuming the Prop A paid sick leave rules still apply — they were repealed effective Aug 28, 2025.
- Filing 1099s only with the IRS when Missouri expects its own copy.
The federal baseline
This page covers what Missouri adds. The federal rules underneath it apply here too.
Common questions
Does Missouri tax a founder’s gain when the company is sold?
From tax year 2025, Missouri lets individuals subtract 100% of the capital gains on their federal return, short- and long-term. A Missouri-resident founder selling shares pays no Missouri income tax on the gain whether or not it qualifies as QSBS under IRC §1202. Corporations do not get the same treatment until Missouri’s top individual rate falls to 4.5%.
Is the Missouri R&D tax credit worth applying for?
It is incremental, capped and applied for. The credit is 15% of qualified research expenses above a base, at most $300,000 per company per year, from a $10 million statewide pool the Department of Economic Development allocates. The application is due by the end of the tax period after the one the credit is for. A pre-revenue company with no Missouri tax to offset can carry an unused credit forward 12 years or sell the certificate — the statute allows up to 100% to be transferred. The program sunsets on December 31, 2028 unless the legislature renews it.
Advisory next door
- IAIowa advisoryIowa replaced its Research Activities Credit in 2026 with an IEDA-certified R&D credit of up to 3.5% of Iowa research spending, refundable and capped at $40 million a year. Individuals pay a flat 3.8%.
- ILIllinois advisoryIllinois offers a nonrefundable 6.5% R&D credit, caps net loss deductions, and from 2026 taxes QSBS gain the IRS excludes; most founder mistakes come from Chicago’s extra layer.
- KYKentucky advisoryKentucky’s state rates are moderate, but local occupational license taxes on wages and profits, a sales tax that reaches SaaS and a $175 minimum LLET catch startups, and 2026 conformity skips Section 174A.
- TNTennessee advisoryTennessee has no tax on wages and a lighter franchise tax since 2024, but entities still pay franchise, excise and gross-receipts business tax, and SaaS is subject to sales tax.
- ARArkansas advisoryArkansas incentives are application-based through AEDC. Ten-year NOLs and no bonus depreciation make Arkansas losses something to model, not assume.
- OKOklahoma advisoryOklahoma’s incentives are targeted programs rather than a broad R&D credit, and its three-factor formula makes office location a corporate tax decision.
- KSKansas advisoryKansas’s R&D credit is 10% of incremental research spending and transferable by companies with no tax to offset. Single sales factor from 2027 changes where Kansas income lands.
- NENebraska advisoryNebraska’s Angel Investment Tax Credit gives investors a refundable credit for backing small Nebraska tech companies. Personal and corporate rates are falling to 4.55% in 2026.
Founder guides on this
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
- EquityStock options, 409A valuations and vesting for startupsHow option strike prices are set by a 409A valuation, how vesting and the cliff work, and why ASC 718 makes every grant an expense on your P&L.
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
More of the Missouri guide
- AccountingAccounting and state tax in MissouriCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in MissouriSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in MissouriPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in MissouriWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in MissouriRegistering to do business, annual reports, franchise tax and the filing calendar
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.