Missouri for retirees: Social Security exempt at 62, IRAs taxed almost in full

Missouri is generous with Social Security and stingy with everything else a retiree lives on. Social Security is exempt in full for anyone 62 or older, with no income limit, and so is military retirement pay. A pension from a government employer is exempt up to $48,967 for 2026, but that cap is reduced dollar for dollar by the Social Security you exempted, so the two do not stack. A private pension, an IRA withdrawal or a 401(k) distribution gets an exemption of $6,000 per person, and only if Missouri adjusted gross income, less taxable Social Security, is $25,000 or below on a single return or $32,000 married; a few thousand dollars above that it is gone. Everything not exempted is taxed at 4.7% after the standard deduction. The one break that cuts across all of it is the 2025 capital gains subtraction: a retiree who sells appreciated stock, a rental or a business pays Missouri nothing on the gain. Property tax relief comes in two forms, a state credit of up to $1,100 for low-income seniors claimed on the return, and a county-by-county freeze at age 62 claimed at the courthouse.

The common mistake is to hear that Missouri does not tax retirement income. It does not tax Social Security. It taxes most of a typical IRA or 401(k) in full, at the rate it taxes wages.

What Missouri does with each kind of retirement income

The exemptions in Part 3 are of the federally taxable amount, from Form 1040 lines 4b, 5b and 6b, not the gross benefit.

Social Security: the age-62 box

For tax years 2024 and later, Missouri exempts the full taxable amount of Social Security benefits for anyone who is 62 or older by December 31, and Social Security disability benefits at any age. There is no longer an income test. The exemption is claimed on Form MO-A, Part 3, Section C, and carried to line 8 of the MO-1040, and it requires one thing software sometimes misses: the 62-or-older box on page 1 of the return must be checked. A 61-year-old drawing survivor benefits does not qualify and pays 4.7% on the federally taxable part.

Public pensions: the cap that shrinks

A pension from any federal, state or local government employer, including a teacher’s pension and a Survivor Benefit Plan annuity, is exempt up to the maximum Social Security benefit for the year, $48,967 for 2026 ($47,633 for 2025), with no income limit since 2024. The catch is on line 3 of Section A: if that spouse also claimed the Social Security exemption, the pension cap is reduced by the Social Security exempted. A retired state employee with a $30,000 pension and $20,400 of taxable Social Security exempts $20,400 of Social Security and $9,600 of pension, not $30,000 of pension. A retiree with $45,000 of taxable Social Security and a $20,000 government pension exempts the Social Security and $3,967 of the pension. The two spouses’ figures are run in separate columns, so one spouse’s Social Security does not reduce the other spouse’s pension cap.

Private pensions, IRAs and 401(k)s: $6,000, rarely

Section B starts with Missouri AGI, subtracts taxable Social Security, and compares the result with $25,000 (single, head of household, qualifying widow(er)), $32,000 (married filing combined) or $16,000 (married filing separately). Each spouse then takes the lesser of their taxable private pension and IRA income or $6,000, the two are added, and the excess of income over the limit is subtracted from that total. A single retiree with $28,000 of Missouri AGI after Social Security and a $12,000 IRA withdrawal gets $6,000 less $3,000, or $3,000. At $31,000 the exemption is zero. A couple each drawing a pension can start with $12,000 and sees it gone at $44,000.

For most retirees, then, the exemption is not there, and IRA and 401(k) withdrawals are taxed at 4.7% after the standard deduction. The federal 10% early-withdrawal penalty has no Missouri counterpart.

Roth conversions

A Roth conversion is a distribution from a traditional IRA reported on federal line 4b, so it is in federal AGI and in Missouri AGI, and Missouri taxes it at 4.7% like any other IRA withdrawal. There is no state break. A $100,000 conversion costs about $4,700 of Missouri tax on top of the federal tax, and it has two side effects on the Missouri return: it raises Missouri AGI, which lowers the percentage of federal tax you can deduct on line 12 (from 15% to 5% to zero as AGI passes $100,000 and $125,000), and it wipes out whatever private pension exemption was left. It does not affect the Social Security or public pension exemptions, which have no income test. Qualified withdrawals from the Roth later are not in federal AGI and never reach Missouri.

The federal senior deduction, and why it does nothing here

The $6,000 federal deduction for people 65 and older, in effect for 2025 through 2028, comes off after adjusted gross income. Missouri starts from AGI, so the deduction never arrives, and the Department of Revenue has said in plain words that it cannot be claimed on the Missouri return. What Missouri gives for age is the Social Security exemption at 62 and the additional standard deduction at 65, which follows the federal figure: $2,000 single or head of household and $1,600 per married spouse for 2025, with the 2026 amounts to come. Each $1,600 is worth about $75 of tax.

Property tax relief: two programs, two offices

The Property Tax Credit, on the income tax side. Missouri’s circuit breaker pays up to $750 to a renter and $1,100 to an owner for 2025, based on the rent or property tax paid on your home and your household income. A 2025 law expands the credit for 2026 with higher income limits, larger maximum credits and indexing; the Department had not published the 2026 chart when this was written, so the figures that follow are the 2025 ones and the 2026 figures are to come (verify). You qualify if by December 31 you are 65 or older, or 100% disabled, or a 100% service-connected disabled veteran, or 60 or older and receiving surviving-spouse Social Security, and you were a Missouri resident all year. Household income counts everything, taxable and not, including all of your Social Security, and the 2025 limits are low: $30,000 single or $34,000 married for owners who owned and occupied the home all year, $27,200 single or $29,200 married for renters and part-year owners. VA payments are excluded for disabled veterans. Renters whose landlord pays no property tax, a tax-exempt senior facility for instance, do not qualify. The claim goes on Form MO-PTS attached to the MO-1040, or on Form MO-PTC by itself for someone who does not otherwise file, and MyTax Missouri files it online. The couple in the example, with $40,000 of Social Security alone, is well over the line.

The senior property tax freeze, at the county. Under a 2023 law amended in 2024, a county or the City of St. Louis may adopt a credit that freezes the property tax on a senior’s home at the amount in the year of application. The eligibility test is age 62 or older, ownership or a legal interest in the home, occupancy as the primary residence and liability for the tax. There is no income limit. The freeze covers the regular ad valorem levies; special assessments are still due in full, and some jurisdictions exclude certain levies. The application is made to the county, not the Department, and the rules differ from one courthouse to the next. Jackson County takes applications through the year, needs no annual renewal, and lists two different deadlines on its own page (verify). The City of St. Louis opens its window March 1 to June 30 each year, requires reapplication every year, caps the home’s market value at $528,392 and freezes only the city levies, not the school or library taxes. Many counties have adopted some version (verify your county); ask the collector or assessor what is frozen and when to file. Missouri has no general homestead exemption, so for a 62-year-old homeowner the freeze is the main thing on offer.

Withholding and estimated payments

Pension payers and IRA custodians can withhold Missouri tax if you ask. Anyone who expects to owe $100 or more after withholding and credits owes estimated payments on Form MO-1040ES, due April 15, June 15, September 15 and January 15, with a safe harbor of 100% of last year’s tax or 90% of this year’s. A retiree living on Social Security and a government pension under the cap often owes nothing; one living on IRA withdrawals needs withholding on the distributions or four vouchers.