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With Parson’s signature, Missouri finally has Wayfair tax plan in place

JEFFERSON CITY, Mo. — With Gov. Mike Parson’s signature, Missouri became the last state to enact a sales tax on online purchases, commonly known as a Wayfair tax.

SBs 153 and 97 from Sen. Andrew Koenig allows the state to impose a sales tax on online purchases made through vendors with a physical presence in the state, a practice Parson said had already been adopted by 49 states and Washington, D.C. Parson said the change would benefit more than 570,000 small businesses across the state. 

The new tax is slated to take effect in 2023.

“Wayfair is something we’ve all worked on for years — including when I was in the Senate — and to be able to sign this into law today is a big deal for the state of Missouri and a big deal for our small businesses,” he said. “With everything we’ve been through in this crisis over the last 16 months, if there’s ever a time to get it done and get it right, now’s the time.”

Parson applauded the General Assembly’s effort to get the legislation to his desk; Wayfair was one of the priorities listed during his State of the State address this year and had been a three-year push in the legislature by Koenig. It passed the House on the final day of session. 

“We had the worst thing you could have in a tax code: something that tells Missourians to purchase from a non-Missouri business. We needed to make this change,” Koenig said. “I’m very happy that we were able to put tax cuts in here, cutting Missouri’s income tax down to 4.8 percent. This is going to help attract businesses and people to the state of Missouri.”

Parson Wayfair Koenig
Gov. Mike Parson signs a Wayfair tax into law. (THE MISSOURI TIMES/CAMERON GERBER)

The move drew the attention of the Missouri Municipal League (MML), a supporter of the legislation. 

“This is a big win for Missouri cities, their residents, and local businesses,” said MML President Chuck Caverly. “The unfair advantage out-of-state vendors had is now fixed. They will simply pay the same level of taxes that our local businesses have been paying for decades, and that money goes directly to critical services such as first responders, street repair, park maintenance and so much more.”

The bill includes various taxation provisions, from the elimination of income tax on COVID-19 stimulus funds to the creation of an Urban Agricultural Zone Fund. The bill will also gradually decrease video service provider fees to settle at 2.5 percent of gross receipts in 2027, modify the use tax economic nexus, and enact a Voluntary Firefighter Cancer Benefits Trust, along with various changes to local tax processes. 

States have passed internet tax laws over the past several years following 2018’s South Dakota v. Wayfair, Inc., in which the U.S. Supreme Court said states could collect taxes on remote sales. Previously, states could only collect tax on transactions with businesses maintaining a physical presence in the state. Since the verdict, many states have passed their own legislation establishing an economic nexus, or a taxable threshold on online sales.

Wayfair is the latest piece of legislation signed into law by the Republican executive this year. Other major bills include a statewide prescription drug monitoring program (PDMP), a controversial gun-rights bill, and an expansion of the state’s protection order policies.