Moving from Canada to Missouri: Taxes

Missouri has been cutting its income tax rate for several years running, and the top bracket now sits around 4.8%, with a further drop to 4.5% or lower possible if revenue triggers keep firing. That’s a modest number next to any Canadian province. But Missouri has a wrinkle most states don’t bother with: both Kansas City and St. Louis charge their own 1% earnings tax on top of the state rate, and it applies whether you live there or just work there. For Canadians landing at Cerner (now Oracle Health) or Burns & McDonnell in Kansas City, or Anheuser-Busch, Boeing Defense, Edward Jones, or Emerson Electric in St. Louis, the earnings tax is a real line item, not a footnote.

How does Missouri’s tax compare to provinces?

Missouri’s graduated brackets top out around 4.8%, far below every Canadian province’s top marginal rate.

Jurisdiction	Top rate	Notes
Ontario	~20.5% (with surtax)	On income above $220,000
BC	20.5%	On income above $252,752
Alberta	15%	On income above $355,845
Quebec	25.75%	On income above $126,000
Missouri (state only)	~4.8%	Top bracket, falling under revenue triggers

On $150,000 of employment income, Missouri state tax alone runs roughly $6,000 to $6,700. Add the 1% earnings tax for a Kansas City or St. Louis resident and the combined bill climbs to about $7,500 to $8,200. Ontario provincial tax on the same income would run closer to $17,000 to $19,000 CAD. Missouri still comes out well ahead of any province, even with the city tax layered in.

How does the Kansas City and St. Louis earnings tax work?

This is the part that surprises most people, since only a handful of US cities do this at all. Both Kansas City and St. Louis charge a 1% earnings tax, and it applies broadly: to residents on all their income, and to nonresidents on income earned for work physically performed inside city limits. If you live in a KC suburb like Overland Park (which is actually across the state line in Kansas) or Lee’s Summit and commute into downtown Kansas City for a job at Cerner or Burns & McDonnell, you owe the 1% on your KC-source wages even though you’re not a city resident. The same logic applies in St. Louis for someone commuting in from Clayton or Chesterfield.

Both taxes are voter-renewed every five years, most recently reaffirmed by wide margins in both cities, so they’re a durable feature of the landscape rather than something likely to lapse. No other Missouri city or county charges a local income tax, which is a notable contrast with Ohio’s roughly 600 taxing municipalities. Outside Kansas City and St. Louis proper, Missouri really is just the state rate.

How does Missouri treat the RRSP?

Missouri starts from federal adjusted gross income, so it inherits whatever the treaty already resolved at the federal level. The RRSP treaty deferral under Article XVIII keeps the account’s growth out of federal AGI while it stays deferred, and Missouri follows along, taxing nothing until a distribution shows up in federal AGI. When distributions do occur, they flow through to the Missouri return at the graduated state rate, plus the city earnings tax if you’re a KC or STL resident (the earnings tax generally reaches most forms of income for residents, unlike its narrower nonresident wage-only reach).

Missouri also has a public and private pension exemption that phases out at higher income levels, and separately now exempts Social Security benefits entirely starting with the 2024 tax year. Whether RRSP distributions qualify for the pension exemption depends on how they’re characterized on the federal return; this is worth confirming before you build a retirement drawdown plan around it.

TFSA income is taxable federally with no treaty shelter and flows straight through to the Missouri return, plus the city earnings tax where applicable. The standard advice to close the TFSA before you leave Canada still applies.

What happens on the Canadian side?

Leaving Canada for Missouri triggers the same departure sequence as any Canada-to-US move:

• Deemed disposition at fair market value on worldwide property
• A final Canadian return covering January 1 through the departure date
• Provincial tax at your home province’s rates for the period you were still resident
• T1161 and, where the deemed disposition gain crosses the threshold, T1243
• Notifying the CRA of your change to non-resident status
• RRSP stays open and deferred; TFSA gets closed before departure

On the US side, the arrival-year mechanics follow the usual pattern covered in the first US tax return guide, and Missouri’s part-year return picks up only the income earned after you became a resident.

What other taxes does Missouri have?

• Sales tax: 4.225% at the state level, but cities, counties, and special districts stack on top, pushing combined rates to somewhere between 7% and 10%+ depending on the neighborhood, among the higher combined rates in the country. This is the opposite of the income tax story, so day-to-day spending in Missouri isn’t as cheap as the low income tax suggests.
• Property tax: moderate, with effective rates typically around 0.9% to 1.0% of market value. That’s higher than most Ontario municipalities’ 0.6% to 1.2% range on the low end, but nowhere near Illinois’s Cook County rates.
• Estate and inheritance tax: Missouri has neither. For a Canadian settling in with a sizable estate, that’s one less planning layer than states like Illinois or Washington require.

How does Missouri compare to nearby states?

• Illinois: a flat 4.95% state rate with no city income tax anywhere, including Chicago. Slightly higher state rate than Missouri, but no local earnings tax to add on top.
• Kansas: the Kansas City metro straddles the state line, and Kansas’s own graduated rate tops out higher than Missouri’s, with no city earnings tax. Plenty of KC-area Canadians end up comparing an Overland Park, Kansas address against a Missouri-side suburb largely on this basis, plus Kansas’s income-based property tax relief programs.
• Indiana: a flat 3.05% state rate plus county income taxes that are usually under 2%, generally landing lower than Missouri’s KC or STL combined burden.

Put side by side, Missouri’s state-only rate is competitive with this group, but the KC and STL earnings taxes push those two metros closer to Ohio-style municipal territory. Anywhere else in Missouri, you’re paying state tax only.

What should I do next?

The Canadian exit is identical no matter which state you land in: work through the departure checklist before you go. On the Missouri side, the one detail that actually changes your number is whether you’re settling inside Kansas City or St. Louis city limits (or commuting into one for work), since that’s what triggers the 1% earnings tax. Everywhere else in the state, it’s just the graduated state rate.

• Departure tax checklist, the full Canadian exit sequence
• US-Canada tax treaty explained, how Article XVIII protects the RRSP
• RRSP and TFSA on a US move, what to keep open and what to close
• First US tax return after moving from Canada, the arrival-year mechanics
• Canada departure tax: T1161 and T1243, the deemed disposition forms
• State income tax for cross-border filers, how state rules generally interact with the treaty
• Moving from Canada to Illinois, the flat-rate, no-city-tax comparison
• Moving from Canada to Indiana, the low flat-rate Midwest alternative
• Moving from Canada to Ohio, the Midwest state with the heaviest municipal-tax layer
• Moving from Canada to Tennessee, for contrast against a state with no income tax at all
• Moving from Canada to Kansas, the state across the KC metro border with no city earnings tax
• Moving from Canada to Arkansas, the low-rate neighbor to the south

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.