What is exempt from sales tax in Missouri? It’s a question worth thousands in annual savings for businesses navigating compliance. Missouri’s 4.225% state rate, layered with local taxes reaching 11.68% in some areas, makes exemptions financially significant.
Whether you’re pricing inventory, structuring wholesale purchases, or simply trying to charge customers correctly, knowing what’s exempt prevents overcharging and compliance headaches. Hands Off Sales Tax (HOST) helps e-commerce businesses decode Missouri’s exemption rules across all states where you operate—ensuring accurate collection without the administrative burden.
Understanding Exemptions vs. Exclusions
Missouri distinguishes between exemptions and exclusions—they’re not interchangeable.
Exemptions are legislative provisions eliminating tax on items ordinarily subject to tax. The legislature decided certain taxable items shouldn’t be taxed in specific circumstances—prescription drugs, agricultural equipment, manufacturing machinery.
Exclusions define items not subject to tax by their nature. These aren’t taxable transactions under Missouri’s definition of retail sale—isolated sales under $3,000 annually, business transfers, interstate commerce.
Understanding this distinction matters during audits and when interpreting Missouri Department of Revenue guidance.
Missouri Sales Tax: The Foundation
Missouri charges 4.225% state sales tax on most retail transactions. Local jurisdictions pile on their own rates—counties, cities, special districts. Combined rates average around 8% statewide, climbing to 11.68% in parts of St. Louis and 11.98% in Kansas City.
Approximately 760 local taxing jurisdictions exist statewide, each with unique rates and exemption interpretations. For e-commerce sellers, this means calculating tax based on destination—where your customer receives the product—not your business location.
Food and Grocery Exemptions
Missouri taxes food at a reduced 1.225% state rate instead of the full 4.225%. This reduced rate has applied since 1999.
What qualifies:
- Bread, cereal, milk, cheese
- Fruits, vegetables, meat, poultry, fish
- Eggs, flour, sugar, cooking oil
- Baby food and infant formula
- Non-carbonated bottled water
Food must be for home consumption. Restaurant meals, hot prepared foods, and food consumed on premises face full rates.
Candy and soft drinks don’t qualify—they’re taxed at 4.225% plus local rates. Missouri defines candy as “a preparation of sugar, honey, or other sweeteners combined with chocolate, fruit, nuts, or other ingredients in bars, drops, or pieces.”
Local jurisdictions may still add taxes to groceries. Some cities charge local sales tax on food, while others don’t.
Prescription Drugs and Medical Equipment
Prescription drugs dispensed by licensed pharmacists are fully exempt. This covers:
- Prescription medications from pharmacies
- Insulin and diabetic testing supplies (no prescription required)
- Oxygen and oxygen equipment prescribed by physicians
Over-the-counter medications face full tax, even with doctor recommendations.
Durable medical equipment prescribed by physicians qualifies for exemption:
- Wheelchairs, walkers, canes, crutches
- Hospital beds and patient lifts
- Prosthetic devices and orthotics
- Prescribed hearing aids
Mobility aids used exclusively by individuals with disabilities are exempt. General fitness equipment, even when doctor-recommended, remains taxable.
Personal Hygiene Products (NEW 2025 Exemption)
Effective 2025, Missouri exempts essential hygiene products from state and local sales tax under House Bill 508:
- Child and adult diapers
- Hygiene products for urinary incontinence
- Feminine hygiene products for menstrual flow management
This exemption recognizes these as necessities rather than discretionary purchases. No documentation required—exemption applies automatically at point of sale.
Agricultural Exemptions
Missouri provides extensive exemptions for agricultural producers purchasing inputs for commercial production.
Machinery and Equipment: Farm machinery used for any agricultural purposes qualifies—tractors, combines, planters, irrigation systems, grain storage. Equipment must be used more than 50% for agricultural production.
Feed and Seed: Animal feed for livestock raised commercially is exempt. This includes grain, hay, commercial feed mixes, supplements. Seed for planting commercial crops—corn, soybeans, wheat—also qualifies.
Fertilizer and Chemicals: Fertilizers, herbicides, pesticides, agricultural chemicals used in producing crops or livestock are exempt. This extends to soil amendments, plant growth regulators, fumigants.
Fuel for Farm Use: Diesel (50% exempt), propane, natural gas used exclusively for agriculture can be purchased tax-free or at reduced rates. Farmers must obtain permits from Missouri Department of Revenue and purchase from authorized vendors.
Livestock: Animals purchased for breeding, raising, or other agricultural purposes are exempt—cattle, hogs, sheep, horses, poultry for commercial operations.
To claim agricultural exemptions, buyers provide sellers Form 149, Certificate of Non-Taxability, certifying qualified agricultural use.
Manufacturing Exemptions
Manufacturers benefit from significant exemptions reducing production costs.
Manufacturing Machinery and Equipment: New or used machinery purchased for direct manufacturing use is fully exempt—production line equipment, assembly machinery, industrial robots, computer-controlled systems.
“Manufacturing” requires transforming raw materials into finished goods through fabrication, assembly, processing, or refinement. Mere packaging doesn’t qualify.
Replacement Parts and Supplies: Replacement parts for exempt equipment are exempt. Industrial supplies consumed directly in manufacturing—cutting fluids, abrasives, chemicals, catalysts—qualify.
Utility Exemptions: Since January 1, 2023, electricity, coal, gas, water, and other energy sources consumed in manufacturing processes are fully exempt from state and local sales tax (previously 50% exempt). This applies only to utilities directly powering manufacturing equipment, not general facility operations.
Pollution Control Equipment: Equipment installed exclusively for pollution control or environmental protection is exempt—air scrubbers, water treatment systems, waste management equipment.
Manufacturers must maintain detailed records documenting exempt purchases. Missouri Department of Revenue audits frequently review manufacturing exemptions, requiring clear proof of direct use.
Utilities for Domestic Use
Residential utilities are exempt from Missouri sales tax:
- Metered water service for domestic use
- Electricity and electrical current for homes
- Natural, artificial, or propane gas for residential use
- Wood, coal, or home heating oil for domestic purposes
This exemption applies only to residential consumption. Commercial utility services face sales tax, except for manufacturing facilities receiving specific exemptions.
Multi-family properties purchasing through single or master meters for residential apartments or condominiums also qualify, including service for common areas, facilities, and vacant units.
Digital Products and Software
Missouri’s treatment of digital products confuses many e-commerce sellers. Here’s clarity:
Digital Products ARE Taxable: Missouri taxes digital goods downloaded or streamed:
- E-books and digital publications
- Streaming media (music, video)
- Mobile apps and software downloads
- Digital photographs and artwork
SaaS and Cloud Services NOT Taxable: Software as a Service (SaaS) and cloud-based subscription services are generally not subject to Missouri sales tax. A June 2023 letter ruling from Missouri Department of Revenue confirmed digital music, interactive computer services, and subscription services are not taxable.
Downloaded vs. Preloaded Software: Generally, downloaded software is intangible and not taxable. However, software preloaded on physical media (like CDs or USB drives) is taxable as tangible personal property.
Internet Access Services
Charges for internet access services are exempt under the federal Internet Tax Freedom Act. This includes:
- Residential broadband service
- Commercial internet access
- Wi-Fi service charges
- DSL, cable, or fiber internet connections
However, digital products delivered via internet (streaming content, downloads) may be taxable. The exemption applies to the access service itself, not the content.
Sales Tax Holidays
Missouri offers temporary exemptions during specific periods, creating savings opportunities:
Back-to-School Sales Tax Holiday (First Friday-Sunday in August):
- Clothing $100 or less per item (excluding accessories)
- School supplies $50 or less per item
- Computer software $350 or less
- Personal computers and peripheral devices $1,500 or less
Show Me Green Sales Tax Holiday (April 19-25 annually):
- Energy Star certified new appliances
- Maximum retail value $1,500 per appliance
- Covers refrigerators, dishwashers, washing machines, dryers, water heaters, air conditioners
These holidays exempt items from state and local sales tax. No documentation required—automatic exemption during specified dates.
Nonprofit and Religious Organization Exemptions
Qualified nonprofits may purchase goods and services exempt from Missouri sales tax, but exemption isn’t automatic.
Who Qualifies: Organizations must hold 501(c)(3) status and obtain exemption authorization from Missouri Department of Revenue. Religious, charitable, scientific, educational organizations may qualify.
What’s Exempt: Purchases used directly in exempt functions qualify—office supplies, equipment, materials for charitable programs, property for religious worship or education.
What Remains Taxable: Purchases for activities unrelated to exempt purposes remain taxable. Property purchased for resale or commercial activities faces sales tax.
Organizations must present their Missouri tax exemption letter at purchase using Form 1746, Missouri Sales Tax Exemption Certificate.
Resale Exemptions
Businesses purchasing inventory for resale buy tax-free by providing properly completed resale certificates. This prevents double taxation—tax is collected from final consumers, not at each distribution stage.
How It Works: Retailers, wholesalers, distributors register for Missouri sales tax licenses, then provide Form 149 (Certificate of Non-Taxability) to suppliers when purchasing inventory.
What Qualifies: Tangible personal property purchased specifically for resale in normal business operations qualifies. This includes finished goods, raw materials becoming part of finished products, packaging materials.
What Doesn’t Qualify: Supplies, equipment, or property used in your business but not resold remains taxable—office supplies, computers, vehicles, fixtures.
Misusing resale certificates constitutes tax evasion. Missouri Department of Revenue audits verify usage, matching purchases against sales records. If you cannot validate exempt transactions during audits, you’re liable for uncollected tax plus late fees and interest.
Shipping and Handling Charges
Missouri’s treatment of shipping charges depends on how they’re presented:
Taxable Shipping: Charges included in the sale price or when the purchaser is required to pay shipping are generally taxable along with the product.
Exempt Shipping: If shipping costs are separately stated and the purchaser isn’t required to pay them (optional expedited shipping, for example), they’re generally exempt.
When selling taxable goods, default to including shipping in taxable amounts unless clearly optional and separately stated.
Penalties and Consequences
Understanding penalties for non-compliance helps emphasize proper exemption documentation:
Late Filing Penalties: 5% per month on unpaid tax, maximum 25%. Even zero returns must be filed—failure to file when no tax is due still triggers penalties.
Interest Charges: Applied to all overdue payments, compounding the cost of non-compliance.
Audit Lookback Periods: Technically, Missouri can audit from the point you started business in the state if you never registered. For registered businesses with proper documentation, typical lookback is 3 years (4 years in some cases).
Missing Certificate Liability: If you accepted an exempt sale without collecting valid exemption certificates, you’re liable for uncollected tax during audits. Certificates aren’t just paperwork—they’re your audit defense.
What E-Commerce Sellers Must Know
Missouri’s economic nexus law requires remote sellers to collect sales tax once exceeding $100,000 in Missouri sales during previous or current calendar year. Physical presence isn’t necessary—sales volume alone triggers obligations.
Destination-based sourcing means calculating tax based on where your customer receives products. With 760 local jurisdictions, manually tracking rates and exemptions creates significant compliance risk.
Exemption certificates must be collected and validated. When customers claim exemptions—resale, manufacturing, agricultural, nonprofit—you need proper documentation. Missing or invalid certificates leave you liable for uncollected tax during audits.
Sales tax software helps automate calculations, but configuration matters. Common mistakes include incorrectly applying exemptions, overtaxing exempt items, failing to update rate changes. HOST offers a Free Sales Tax Software Review identifying costly configuration errors.
HOST: Your Partner for Missouri Sales Tax Compliance
Understanding exemptions is one piece. Between monitoring nexus thresholds, registering in new jurisdictions, calculating rates across 760+ Missouri localities, validating certificates, and filing on time, compliance demands serious resources.
What HOST Delivers:
- Nexus Analysis: We analyze your Missouri sales determining if you’ve met the $100,000 threshold and identify all applicable local jurisdictions
- Sales Tax Registration: We handle registration with Missouri Department of Revenue and local authorities, managing paperwork and follow-up
- Exemption Certificate Management: We help establish systems for collecting, validating, maintaining exemption certificates
- Automated Filing: We file your Missouri state and local returns monthly, quarterly, or annually based on requirements
- Notice Management: We interpret and respond to Missouri Department of Revenue notices, resolving issues before penalties
- Audit Defense: We’re your trusted partner resolving Missouri sales tax audits, organizing documentation and defending your position
We’ve been 100% focused on sales tax since 1999. That’s over 25 years managing compliance so you keep your hands on your business. Through parent company TaxMatrix, we’ve helped North America’s largest companies navigate sales tax—now bringing that expertise to e-commerce businesses of all sizes.
Ready to Simplify Missouri Sales Tax Compliance?
Missouri’s exemption landscape creates genuine complexity—reduced rates on groceries, full exemptions for prescriptions, new hygiene product exemptions, digital product taxability, agricultural producer benefits, manufacturing incentives, resale certificate validation. Each exemption carries documentation requirements and audit risks when misapplied.
Whether you’re crossing Missouri’s $100,000 threshold, expanding to new states, or overwhelmed by monthly obligations, professional management eliminates guesswork and prevents costly mistakes. Every hour researching exemptions or calculating rates is an hour not spent growing your business.
Contact HOST today to discuss your Missouri sales tax needs or schedule a free consultation. Let us handle the tax so you can focus on sales.
Want to learn more? Get our “10 Sales Tax Mistakes E-Commerce Sellers Make” e-book.
Frequently Asked Questions
Is food taxed in Missouri?
Food purchased for home consumption faces a reduced 1.225% state sales tax rate instead of 4.225%. Candy, soft drinks, and prepared hot foods face full rates. Local jurisdictions may add additional taxes.
Are prescription drugs exempt from sales tax in Missouri?
Yes, prescription drugs dispensed by licensed pharmacists are fully exempt. Insulin and diabetic supplies are also exempt without prescription requirements.
Are diapers and feminine hygiene products taxed in Missouri?
No. As of 2025, Missouri exempts child and adult diapers, incontinence products, and feminine hygiene products from state and local sales tax under House Bill 508.
Are digital products taxable in Missouri?
Yes, digital downloads and streaming content are taxable in Missouri—including e-books, music, videos, and apps. However, SaaS (Software as a Service) and cloud-based subscription services are generally not taxable.
Do farmers pay sales tax in Missouri?
Qualified agricultural producers can purchase many inputs tax-free, including machinery, equipment, feed, seed, fertilizer, chemicals, and livestock for agricultural production. Farmers provide Form 149 to vendors when claiming exemptions.
Are manufacturing materials exempt from Missouri sales tax?
Manufacturing machinery, equipment, and replacement parts used directly in production are fully exempt. Industrial supplies consumed in manufacturing processes also qualify. Utilities used in manufacturing are fully exempt from state and local sales tax as of January 2023.
How do I claim a sales tax exemption in Missouri?
Buyers provide sellers proper documentation—typically Form 149 (Certificate of Non-Taxability) for resale or agricultural exemptions, or a Missouri tax exemption letter for nonprofit organizations. Sellers must collect and maintain these certificates supporting exempt sales during audits.
What is Missouri’s economic nexus threshold for remote sellers?
Remote sellers must collect Missouri sales tax once exceeding $100,000 in Missouri sales during previous or current calendar year. Physical presence isn’t required—sales volume alone triggers collection obligations.
