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Missouri · 401k state-tax

401(k) and retirement accounts in Missouri: state deduction and Roth considerations

Traditional 401(k) contributions reduce Missouri taxable income today at 4.8% marginal. Roth 401(k) reverses the math. For equity earners, the state-tax dimension often flips the right answer.

What Missouri residents actually pay

Missouri taxes ordinary income at a top marginal rate of 4.8%. RSU settlement value, NSO exercise spread, and ESPP discount income all count as ordinary wages for this purpose and flow through the state's normal brackets.

Traditional 401(k) in Missouri

A pre-tax 401(k) contribution reduces both federal and Missouri taxable income today. At the top bracket, every $1,000 contributed saves 39.8 cents on the dollar (federal 35% + state 4.8%). At retirement, withdrawals are taxed at your then-current bracket.

Roth 401(k) breakeven

Roth 401(k) contributions are taxed at today's rates; withdrawals are tax-free. The Roth choice beats traditional when your retirement bracket is higher than your contribution bracket. For equity earners in high-income years, traditional is usually right during big RSU years and Roth is right during low-income transition years.

Mega-backdoor Roth

After-tax 401(k) contributions above the standard $23,500 limit can be converted to Roth in plans that allow it. For high earners in Missouri, this is the largest tax-advantaged bucket available after the primary 401(k) and IRA caps. Check whether your plan allows after-tax contributions and in-plan Roth conversions.

Frequently asked

Does Missouri tax RSU income the same as wages?
Yes. Missouri treats RSU ordinary income as wages, taxable at the state's top marginal rate of 4.8%. Supplemental-wage federal withholding (22%, or 37% above $1M YTD) does not adjust for state withholding, so you often owe extra at filing.
What happens if I exercise ISOs while living in Missouri?
Missouri does not run a separate state AMT, so only federal AMT applies. You still need to model the bargain element carefully if you plan a cashless exercise-and-sell.
I moved to Missouri from another state. Who taxes my vesting RSUs?
Most high-tax states (CA, NY, MA) source RSU ordinary income to workdays between grant and vest. If your grant pre-dates your Missouri move, expect the old state to tax the portion of each tranche attributable to workdays earned there. Missouri taxes the remainder.
Can I reduce Missouri taxes by timing my RSU sales?
Missouri taxes long-term capital gains at the same rate as ordinary income, so timing alone does not produce a state savings — only federal. Holding for 12 months still halves the federal rate on gains above basis.

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