Hiring in Missouri: Withholding, Unemployment Tax and the $15 Minimum Wage

If you're hiring employees in Missouri, you need to understand the state's payroll tax requirements, minimum wage rules, and employment reporting obligations. These rules changed significantly in 2025 and 2026, so even experienced employers should review the current landscape. This guide covers what you must do as an employer in Missouri to stay compliant.

Missouri's $15 Minimum Wage (2026): What Changed

On January 1, 2026, Missouri's minimum wage rose to $15.00 per hour. This became the state's new floor for covered non-exempt employees, though some employers, such as retail or service businesses with less than $500,000 in annual gross sales, are not covered by the state law.

Here's what you need to know: House Bill 567, passed in 2025, made a significant change to Missouri minimum wage policy. The law repealed the automatic cost-of-living adjustments that had been scheduled under Proposition A, which voters approved in November 2024. Effective August 28, 2025, those annual indexing increases stopped. This means the $15.00 rate is now fixed unless the legislature changes it again. There is no scheduled automatic increase for 2027 or beyond.

The $15 minimum wage applies to:

• Most private sector employees in Missouri
• Employees working in Kansas City and St. Louis (state law bars cities from setting a higher local minimum wage, so the state rate applies there too)
• Tipped employees, who may be paid a cash wage of 50% of the minimum wage ($7.50 per hour) as long as tips bring them up to $15.00
• Seasonal and temporary workers

If you pay less than $15.00 per hour to any non-exempt employee, you are in violation of Missouri labor laws. Make sure your payroll system reflects this baseline.

Missouri Withholding Tax: Setting Up Your Account

All Missouri employers must withhold state income tax from employee paychecks. To do this legally, you must first register with the Missouri Department of Revenue. The state income tax is graduated, ranging from 0% to 4.70% at the top marginal rate for 2026. The exact amount withheld depends on your employee's income, filing status, and the number of dependents they claim on their W-4 form.

Here's what to do:

1. Open a Missouri withholding account at the Department of Revenue before you pay your first employee. You can do this online at dor.mo.gov/taxation/business.
2. Get your withholding account number from the state. This number identifies your business for all Missouri income tax withholding purposes.
3. Calculate and withhold state income tax from each paycheck using the employee's W-4 information and Missouri tax tables.
4. Deposit and report withheld taxes according to the Department of Revenue's schedule. Your filing frequency (annual, quarterly, monthly or quarter-monthly) is assigned by the Department of Revenue based on how much you withhold.

If you hire a remote employee in Missouri, or an employee working from Missouri, you must withhold Missouri state income tax even if your business is headquartered elsewhere. This is a common compliance gap.

Missouri Unemployment Tax (UI Tax): The Rate and Registration

Missouri employers are required to pay unemployment insurance tax to fund the state's unemployment benefits system. Your account is registered with the Missouri Division of Employment Security, not the Department of Revenue (this is a common point of confusion).

The missouri unemployment tax rate varies based on:

• Your industry classification
• Your company's experience rating, how many unemployment claims your former employees have filed against you
• The state's overall UI fund balance

New employers in Missouri start with a new-employer rate assigned by the Division of Employment Security. Once you have enough history, your experience rating kicks in, and your rate can decrease (if few claims are filed) or increase (if you have a high claims history).

To register for UI tax:

1. Apply with the Division of Employment Security once you hire your first employee and become liable for unemployment tax.
2. Provide your business structure (LLC, corporation, sole proprietor), business address, and payroll information.
3. Receive your unemployment account number (also called your state account number).
4. Pay your quarterly UI tax obligation by the due date, typically the last day of the month following the quarter (e.g., April 30 for Q1 wages).

Like federal FUTA tax, which applies to wages up to a cap (currently $7,000 per employee per year), Missouri UI tax applies only to each employee's wages up to the state's annual taxable wage base, which the Division of Employment Security publishes each year. Keep detailed wage records so you can accurately report and pay this tax.

Missouri New Hire Reporting: A Legal Requirement

Missouri law requires all employers to report new hires to the state within 20 days of the hire date. This is not optional. The new hire reporting requirement serves the state's child support enforcement system and unemployment insurance program.

What you must report:

• Employee's full name
• Social Security number
• Date of hire
• Address (employee's residence)
• Your business name and address

You can file new hire reports:

• Online through the Missouri Department of Revenue portal
• By mail or fax using a copy of the employee's federal W-4 or MO W-4, or a printed list
• Through a third-party payroll processor that handles the filing automatically

If you use payroll software or a payroll service, confirm that they are submitting your new hire data to the state. Many employers miss this requirement simply because they assume their payroll provider handles it, always verify.

Intentionally failing to report a new hire can bring a fine of up to $25, or $350 per report if the employer and employee conspire not to report. File on time.

Local Earnings Tax in Kansas City and St. Louis

Two Missouri cities have their own local earnings tax that complicates withholding: Kansas City and St. Louis. If you employ anyone who works in these cities, or who lives in one of them, you may owe local earnings tax withholding.

Kansas City earnings tax is 1.0% of gross earnings for residents and employees working in the city. St. Louis earnings tax is also 1%, and St. Louis employers also owe a 0.5% payroll expense tax. Voters renewed both cities' earnings taxes on April 7, 2026.

If you have employees in KC or St. Louis:

1. Register separately with each city's tax authority.
2. Withhold the local earnings tax from those employees' paychecks.
3. File and deposit local earnings taxes on the city's required schedule.

This is a separate obligation from state withholding and unemployment tax. Some employers inadvertently skip local withholding because they focus only on state and federal requirements. Budget for it independently.

What Changed: Paid Sick Leave Repeal

In August 2025, House Bill 567 also repealed Missouri's paid sick leave law. Beginning August 28, 2025, employers in Missouri are no longer required to provide paid sick leave to employees. If you had been offering it in compliance with Proposition A, you can now revise your policy.

This does not mean you must eliminate paid leave, you can still offer it if you choose. But it is no longer mandated by missouri labor laws. Review your employee handbook and make clear communications to your staff if you are making any changes to leave policy.

Form 2643 and Your State Tax Accounts

Form 2643 is the Missouri Tax Registration Application, the Department of Revenue form used to open a withholding account (most employers now register online). New hire reports are separate and must include:

• Employer identification number (EIN)
• Employer name and address
• Employee's full legal name
• Employee's Social Security number
• Employee's date of birth (optional)
• Date of hire
• Employee's current address

You will need separate accounts for:

• State withholding: Missouri Department of Revenue
• Unemployment insurance: Division of Employment Security
• New hire reporting: Department of Revenue (online, or W-4 copies by mail or fax)
• Local earnings tax (if in KC or St. Louis): City tax authority

Keep your account numbers and login credentials organized. You'll need them to file quarterly or monthly returns, update your account information, and resolve any discrepancies the state identifies.

Building a Compliance Checklist

When you hire your first employee or add a new location in Missouri, use this checklist:

1. ☐ Register for a Missouri withholding account at the Department of Revenue.
2. ☐ Register for a Missouri unemployment insurance account with the Division of Employment Security.
3. ☐ If hiring in Kansas City or St. Louis, register for local earnings tax with those city tax authorities.
4. ☐ Ensure your payroll system withholds at least the $15.00 minimum wage and calculates correct state income and UI taxes.
5. ☐ File new hire reports (online, or W-4 copies) within 20 days of each hire.
6. ☐ Set calendar reminders for quarterly and monthly tax deposits and filings.
7. ☐ Provide employees with accurate pay stubs showing state withholding and local taxes if applicable.
8. ☐ Review missouri labor laws and your employee handbook annually, especially after legislative changes like HB 567.

Many small employers benefit from using a payroll service (like ADP, Gusto, or Paychex) or consulting with a CPA to automate these filings. Given the complexity of missouri minimum wage rules, withholding tax requirements, and new-hire reporting, the small cost of professional help often saves time and prevents costly mistakes.

Resources and Next Steps

To stay current on Missouri hiring requirements:

• Missouri Department of Revenue: dor.mo.gov/taxation/business, Register for withholding and file new hire reports.
• Division of Employment Security: Register for unemployment insurance and check your account status.
• Missouri SBDC: sbdc.missouri.edu, Free business counseling on payroll and compliance topics.
• SBA District Office: sba.gov/district/st-louis, Small Business Administration resources for Missouri employers.

If you operate in multiple states, remember that missouri unemployment tax rate, withholding requirements, and minimum wage are distinct from other states' rules. Do not assume federal requirements are enough, state compliance is equally important.

Disclaimer

This guide is informational and is not legal or tax advice. Missouri labor laws, tax rates, and withholding rules change regularly. Before finalizing payroll decisions, withholding amounts, or employment policies, consult a qualified attorney or certified public accountant (CPA) who specializes in Missouri business law and payroll tax. Errors in withholding, new hire reporting, or unemployment tax can result in penalties, interest, and operational disruptions. Confirm all current rates, forms, and deadlines directly with the Missouri Department of Revenue and Division of Employment Security.