What is the Missouri franchise tax?

Missouri eliminated its corporate franchise tax in January 2016, ending an annual privilege tax that corporations paid based on their Missouri assets or stock value. However, financial institutions still pay a combined 4.48% on net income plus 0.0625% on assets under the Financial Institutions Tax structure.

Most corporations escaped this tax in 2016, but understanding its history remains valuable when conducting due diligence on Missouri entities or managing multi-state compliance.

Who owes the Missouri franchise Tax today?

Missouri repealed its franchise tax for most businesses in 2016, but two specific categories of entities may still face franchise tax obligations: corporations with unpaid franchise tax prior to 2016 and financial institutions. 

Here are the relevant filings for businesses operating in Missouri:

• Financial Institutions Tax: Banks, trust companies, and credit unions still owe the Financial Institutions Tax under Chapter 148, RSMo
• Foreign entity registration: Companies registering to do business as foreign entities in Missouri must still appoint a registered agent, even without franchise tax obligations
• Annual reports: Corporations must continue filing annual reports with the Secretary of State, separate from the now-eliminated franchise tax
• Information sources: Be cautious of outdated online sources from before 2016 that still describe the tax as current

Important exemptions to note: LLCs, partnerships, and sole proprietorships were never subject to Missouri's franchise tax, even before its repeal.

What is the Financial Institutions Tax?

Today, only financial institutions face a franchise-style tax under Chapter 148.  This tax combines income tax and asset-based components, creating a more complex obligation than the previous franchise tax. Financial institutions must maintain relationships with registered agents in Missouri and file appropriate annual reports alongside their tax filings.

Unlike the repealed franchise tax, this financial institutions tax applies regardless of asset size, creating ongoing compliance requirements for banks and similar entities operating in Missouri.

Streamline your multi-state compliance with Discern

Managing state compliance across multiple jurisdictions requires meticulous tracking, consistent documentation, and awareness of state-specific requirements. Missouri's repeal of its franchise tax represents just one element in a complex compliance landscape for multi-entity businesses. 

Discern offers comprehensive compliance and filing management, handling requirements across 51 jurisdictions simultaneously and affordably. By utilizing automated Secretary of State filings, setting up takes just minutes, providing peace of mind for businesses managing multiple entities in today's complex regulatory environment.