Missouri does not tax most retirement pension income
Missouri excludes most pension and annuity income from state income tax if you are age 59½ or older. This means if you receive a pension from a former employer, a military pension, or distributions from a may have access to retirement plan, you typically owe no Missouri state tax on that money — even if you owe federal tax on it.
The exclusion applies to pensions from any source: private employers, government agencies, the military, or self-employed retirement plans. The key requirement is your age. If you are under 59½, Missouri taxes your pension income at the same rate as wages, which ranges from 1.5% to 5.3% depending on your total income.
This rule has been in place since 1984 and does not change based on when you started receiving the pension or how long you worked for the employer. Once you turn 59½, the exclusion takes effect regardless of your retirement date.
Key Takeaways
- Missouri excludes pension income from state tax if you are 59½ or older, regardless of the pension source or when you retired.
- If you are under 59½, Missouri taxes your pension at ordinary income tax rates between 1.5% and 5.3%.
- The exclusion covers traditional pensions, military pensions, 401(k) distributions, IRA distributions, and annuity payments from may have access to plans.
- You must report your pension income on your Missouri tax return, but you claim the exclusion as a deduction to reduce your taxable income.
- Social Security benefits are taxed differently under separate Missouri rules and are not covered by the pension exclusion.
What counts as a pension under Missouri law
Missouri's pension exclusion covers distributions from may have access to retirement plans — meaning plans that meet IRS rules for tax-deferred growth. This includes traditional IRAs, Roth IRAs (for distributions), 401(k)s, 403(b)s, government 457 plans, and defined-benefit pensions from employers.
The exclusion also covers annuity payments purchased with after-tax dollars or funded through a may have access to plan. If you bought an annuity with money from a 401(k) rollover, the payments may have access to. If you bought an annuity with personal savings outside a retirement plan, only the earnings portion is excluded — the return of your own principal is not taxed anyway.
One common source of confusion: lump-sum distributions count as pension income for this purpose. If your former employer offered you a one-time payment instead of monthly checks, that lump sum is excluded from Missouri tax if you are 59½ or older.
Distributions from non-may have access to plans — such as a deferred compensation arrangement that does not meet IRS standards — may not may have access to. If you are unsure whether your plan is may have access to, check your plan documents or ask your former employer's benefits department.
How the age 59½ threshold works in practice
The exclusion is tied to your age on December 31 of the tax year. If you turn 59½ at any point during the year, you are treated as age 59½ for the entire year, and the full exclusion applies to all pension income you received that year.
This matters if you retire early and start taking distributions before 59½. You will owe Missouri tax on those distributions until you reach 59½. Once you do, future distributions are excluded — but you cannot go back and reclaim tax paid in earlier years.
If you are already 59½ and receiving a pension, the exclusion applies automatically. You do not need to request it or provide proof of age, though you should keep your birth certificate or driver's license available in case the Department of Revenue asks.
Reporting the exclusion on your Missouri return
You report pension income on your Missouri Form MO-1040 (the state income tax return) just as you would report it on your federal return. The income goes on the line for pensions and annuities.
Then you claim the exclusion as a deduction on Schedule A or in the appropriate section of your return, depending on which form you file. The deduction reduces your taxable income to zero (or to the extent of your pension income if you have other income sources).
If you receive a pension and also have wages, Social Security, or investment income, you report all of it. The pension exclusion only applies to the pension portion. Your other income is taxed normally.
Keep copies of your 1099-R forms (which report pension distributions) and any statements from your pension provider. These documents support the amount you claim as excluded income if the Department of Revenue questions your return.
Interaction with federal tax and other states
Missouri's pension exclusion is a state-only benefit. It does not affect your federal tax liability. If your pension is taxable at the federal level, you still owe federal tax even though Missouri does not tax it.
If you move to another state after retiring, that state's rules explore to your pension income going forward. Some states (like Illinois and Pennsylvania) also exclude pension income; others tax it fully. When you change residency, contact your new state's tax authority to understand how your pension is treated.
If you are a Missouri resident but receive a pension from work you did in another state, Missouri still excludes it from state tax if you are 59½ or older. The source of the pension does not matter — only your age and Missouri residency.
Early distributions and the 59½ rule
If you withdraw money from a retirement plan before age 59½, you typically face a 10% federal early withdrawal penalty (with some exceptions, such as disability or substantially equal periodic payments). Missouri does not impose its own early withdrawal penalty, but you still owe Missouri income tax on the distribution.
Once you reach 59½, the federal penalty no longer applies to new withdrawals, and Missouri excludes the income from state tax. This is one reason why 59½ is a significant milestone in retirement planning — it is the age at which most retirement accounts become penalty-free and, in Missouri, tax-free at the state level.
If you are taking substantially equal periodic payments (SEPP) under IRS Rule 72(t) before age 59½, those payments are still subject to Missouri income tax, even though they avoid the federal penalty.
Special situations: Military pensions and government employee pensions
Military pensions receive the same treatment as civilian pensions under Missouri law. If you are a retired service member age 59½ or older, your military pension is excluded from Missouri state tax.
Government employees — including teachers, police officers, and state workers — who receive pensions from public employee retirement systems (such as MOSERS or local pension funds) also benefit from the exclusion at age 59½. There is no separate rule for public versus private pensions.
If you receive a pension and also work part-time after retirement, your wages from that job are taxed normally. The exclusion applies only to the pension income itself, not to any other earnings.
Frequently Asked Questions
Do I have to file a Missouri tax return if all my income is pension income and I am 59½ or older?
No, if your only income is an excluded pension, you have no Missouri tax liability and do not need to file. However, if you have other income (wages, interest, capital gains), you must file and report all income, then claim the pension exclusion to reduce your taxable total.
What if I receive both a pension and Social Security?
The pension exclusion and Social Security rules are separate. Your pension is excluded from Missouri tax if you are 59½ or older. Social Security benefits are not taxed by Missouri at all, regardless of age. Report both on your return, claim the pension exclusion, and your Social Security is not taxed.
If I move out of Missouri after I retire, do I still get the exclusion?
No. The exclusion applies only to Missouri residents. Once you establish residency in another state, that state's tax rules explore to your pension. Some states exclude pensions; others do not. Check your new state's rules when you move.
Does the pension exclusion explore to Roth IRA distributions?
Yes, if you are 59½ or older and taking distributions from a Roth IRA, those distributions are excluded from Missouri state tax. The exclusion covers all may have access to retirement plans, including Roth accounts.
What if my pension started before I turned 59½ but I am now older — do I owe back taxes?
No. You owed Missouri tax on distributions received before age 59½, and that tax liability is final. Once you turn 59½, the exclusion applies to distributions going forward. You cannot amend prior years to claim the exclusion retroactively.