Missouri Contractor Taxes and Licensing: Untaxed Labor, Local Licenses

Missouri doesn't list construction, installation or repair labor among its taxable sales, so contractors generally don't charge sales tax on their work. Instead, a contractor improving real property is usually the consumer of materials and pays tax when buying them. The state rate is 4.225%, and cities, counties and special districts add their own.

Do Missouri contractors charge sales tax on labor?

Generally no. Missouri taxes what RSMo 144.020 lists: retail sales of tangible goods, admissions, utilities and telecommunications, lodging and meals, rentals and a few others. Construction, installation and repair services aren't on that list. That puts Missouri in the simpler group of states, unlike Iowa or Kansas, where some repair or remodeling labor is taxed.

The Missouri Department of Revenue's Contractors Tax Matrix defines a contractor as "any person entering into an agreement to improve, repair, replace, erect or alter real property." For those jobs, Missouri treats the contractor as the user of the materials it installs, so the tax shows up on your supply purchases, not on the customer's invoice. The matrix also lists "contractor sales of tangible personal property where title passed to the customer after installation" as exempt, which reflects the same idea: you paid the tax going in.

Sales and use tax on materials in Missouri

The Department of Revenue says "the 4.225 percent state sales and use tax is distributed into four funds": 3% to general revenue, 1% to education, 0.125% to conservation and 0.1% to parks and soils. It adds that "cities and counties may impose a local sales and use tax," and special taxing districts can add more. Check the combined rate for an address with the department's rate lookup.

If you buy materials from an out-of-state supplier that doesn't charge Missouri tax, you generally owe use tax on them. The same goes for anything bought tax-free and then used on a job. Our use tax for contractors guide walks through the common traps, and sales tax on labor vs. materials compares Missouri's approach with other states.

Jobs for exempt entities

When you build for a government body or other exempt organization, the matrix lists building materials as exempt when the entity "provides project exemption certificate." Get the certificate before you buy, keep it with the job file, and use it only for materials that go into that project.

Contractor licensing in Missouri

Most Missouri contractor licensing happens at the city or county level. The Division of Professional Registration's board list includes electrical contractors but no board for general contractors, plumbers, HVAC or roofers, so those are handled by local governments. Kansas City, St. Louis and other cities run their own licensing and permit offices, and rules vary a lot from one county to the next.

The electrical license is the one Missouri twist. The state's FAQ says plainly: "The statewide electrical contractor license is optional, not mandatory." It lets a contractor hold "one license that is recognized statewide instead of having a license for each city or county." Under section 324.920.4, a contractor working where no local license is required, or where it holds the local license, doesn't need the statewide one. A business that wants the statewide license must employ a licensed electrical contractor at a supervisory level. For licensing in general, see contractor license.

Missouri income tax and city earnings taxes

The Department of Revenue says "the individual income tax rate for tax year 2025 is 4.7%" at the top bracket. That's the rate most pass-through owners (sole proprietors, LLC members, S corp shareholders) see on business profit. Missouri adjusts its rate under a revenue-trigger law, so check the department's "What's new" page for the published 2026 rate when you file. Corporate income tax rules are on the department's business tax pages; ask your CPA which applies to your entity.

St. Louis adds a local layer. The city's Collector of Revenue describes "the one percent earnings tax" owed by city residents "regardless of the location of their employer" and by people who work in the city. Businesses there also handle a payroll expense tax, filed quarterly. If you work in other Missouri cities, check whether they levy an earnings or business license tax before you bid.

Federal and state estimated payments are due quarterly when you have no withholding. See quarterly estimated taxes for contractors or plug your numbers into the quarterly estimated tax calculator.

Workers' comp rules for Missouri contractors

Missouri sets a lower bar for construction. The Division of Workers' Compensation says "Missouri employers are required to carry workers' compensation insurance if they have five or more employees," but construction employers must carry it with one or more. Construction means "employers who erect, demolish, alter or repair improvements," which covers most trades businesses. Coverage comes from private insurers or approved self-insurance. More: workers' compensation.

Local taxes to watch in Missouri

• Local sales and use tax: cities, counties and special districts each add rates, so materials bought in one town can cost a different amount of tax than in the next.
• Earnings taxes: St. Louis levies a 1% earnings tax and a payroll expense tax; check any other city you work in.
• Local licenses and permits: often the biggest compliance cost for Missouri contractors working across county lines.