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The Missouri Department of Revenue has released its 2019 withholding computer formula and wage-bracket tables. Also released is the 2019 Form MO W-4. The Missouri Employer's Tax Guide has not yet been updated for 2019. Once updated, it will be available here.

As we previously reported, 2018 HB 2540 decreases the maximum Missouri state personal income tax rate to 5.4% effective January 1, 2019, down from 5.9% for calendar year 2018. (EY Payroll Newsflashes Vol. 19, #119, 7-17-2018; #163, 10-10-2018.)

Supplemental Wages

The supplemental rate of income tax withholding also decreases to 5.4% for calendar year 2019.

If the employee has supplemental or overtime pay, and the payment is included with normal wages, apply the withholding formula to the total payment as if it was a regular payroll wage payment.

If the employee has supplemental or overtime pay and the overtime wages are paid separately from regular wages, you may withhold based upon one of the following two methods.

1. Withhold a flat percentage rate of 5.4% (down from 5.9%) of the supplemental wages
2. Add the supplemental wages to the regular wages paid for the payroll period and apply the withholding formula to the total amount as if it was a regular payroll wage payment, then subtract the tax already withheld from the regular wage payment and withhold the remaining tax from the supplemental payment

Missouri annual standard deduction increases for 2019, personal allowances eliminated

As we reported previously, the Department is following federal law and, as a result, there are now no allowances and the annual standard deduction amounts were increased as of 2018. The 2019 annual standard deduction amounts are as follows:

• Single: $12,200 (up from $12,000)
• Married and spouse works: $12,200 (up from $12,000)
• Married and spouse does not work (this is determined by the check box on Form MO W-4, Line 2, and is not a separate filing status): $24,400 (up from $24,000)
• Head of household: $18,350 (up from $18,000)

Form MO W-4 revised for 2019

The Department has released an updated Form MO W-4 for calendar year 2019. Because there are no longer allowances in the Missouri withholding tables, employees can no longer increase or decrease the amount withheld from their paychecks by claiming allowances that are not consistent with their specific filing situation.

The Department encourages all employees to review their Form MO W-4 and to make corresponding changes based on their filing status. If employees needs additional amounts withheld they should add the additional amount on line 2 of the updated MO W-4.

Missouri top income tax and supplemental withholding rate to decrease as of January 1, 2019

HB 2540 decreases the maximum Missouri state personal income tax rate to 5.4% effective January 1, 2019, down from 5.9% for calendar year 2018. The maximum rate was previously scheduled to decrease to 5.8% for calendar year 2019. The highest rate will be further reduced in 0.1% increments each year, if net general revenue collections meet certain triggers, until the highest rate reaches 5.1%.

Personal and dependency exemptions eliminated, federal tax deduction limited

• Personal and dependency exemptions. Personal and dependency exemptions are eliminated. Prior to calendar year 2018, an individual could deduct $2,100 as a personal exemption, $2,100 for a spouse, and $1,200 for each dependent. HB 2540 codifies the provision that Missouri personal and dependency exemptions are not allowed if the federal exemption amount is zero.
• Federal tax deduction. Previously,individuals could deduct their federal income tax liability up to $5,000 or if filing a combined Missouri income tax return, up to $10,000. Beginning January 1, 2019, this deduction is phased out for individuals based on Missouri adjusted gross income limits. The deduction is allowed at 35% for incomes of $25,000 or less; 25% for incomes of $25,001 to $50,000; 15% for incomes of $50,001 to $100,000; and 5% for incomes of $100,001 to $125,000. The deduction is eliminated for incomes over $125,000.

For more information on Missouri withholding tax, see the Department's website.

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