The Republican-led Missouri House of Representatives passed a bill Wednesday that exempts St. Louis remote workers from a 1% earnings tax if they do not live within city limits.
Representatives voted 100-47 to pass the bill out of the chamber. It now goes to the Senate.
If approved by the full legislature, employees who work for St. Louis-located businesses, by either telecommuting or working remotely, would not be subject to the city’s earnings tax if they do not live in the city, beginning in 2025.
Rep. Jim Murphy, R-St. Louis County, is the sponsor of the legislation.
“This is the remote earnings tax bill that prevents political subdivisions from stealing money from workers that work outside the city and never go into the city and never take any advantage of any of the city services,” Murphy said.
The city’s earnings tax, which is imposed on city workers, makes up about 37% of the city’s general revenue fund.
The tax requires renewal by voters. In 2021, the last time the tax was up for reauthorization, it was approved by 79% of voters. It will be up for another vote in 2026.
Kansas City also imposes an earnings tax, but unlike St. Louis workers, Kansas City employees who work remotely are eligible for reimbursements on earnings taxes.
“Kansas City does it right, and we're not picking on Kansas City,” Murphy said. “We're not picking on St. Louis. We're just saying follow the damn law.”
The St. Louis earnings tax is the subject of an ongoing lawsuit, in which several remote workers sued the city because they were denied refunds on the earnings tax during the COVID-19 pandemic.
Murphy referred to that lawsuit multiple times on the House floor Wednesday,
“They're saying, ‘No, we don't want to do that. We're just going to keep fighting this legally until the end of the world.’ But there's already been a determination that they were violating the law, and this just codifies that,” Murphy said.
While a St. Louis Circuit judge ruled against St. Louis, a decision from the Missouri Court of Appeals is still pending.
Rep. Steve Butz, D-St. Louis, said it’s a mistake for the legislature to act on the issue while the lawsuit is still in progress.
“If you have any conscience and said, ‘Hey, maybe we're the legislature, let's wait for the appellate court to make their decision’ and at that point, win or lose, the city's going to have to comply,” Butz said.
Butz also said losing even some of the revenue would be devastating for St. Louis.
“If you vote for this, you are putting a mortal dagger into the heart of the City of St. Louis,” Butz said. “State control’s not going to help that, nothing is going to help that because we cannot recover from this source of income.”
In addition to limiting who would pay the earnings tax, the bill would require St. Louis to create a process that would allow taxpayers to request a refund on any earnings tax levied on work that was done remotely, outside city limits.
