Missouri Severance — Top 4.7% Tax, Claimant-Choice UI Allocation, 2026

Missouri WARN: what applies#

Missouri has no state-level mini-WARN notice statute. The operative layoff-notice regime for Missouri private employers is federal WARN (29 U.S.C. §§ 2101–2109): employers with 100 or more full-time employees must give 60 days advance written notice for a mass layoff (50+ affected at a single site of employment constituting at least 33% of the active workforce, or 500+ regardless of percentage) or a plant closing. Notice must go to affected employees (or their representatives), the Missouri Department of Higher Education and Workforce Development (DHEWD) Rapid Response unit, and the chief elected official of the local government. Federal WARN penalties: back pay and benefits for each day notice was not given (up to 60 days), plus a $500/day civil penalty payable to the local government. Missouri adds no shorter notice, no lower employer-size trigger, and no statutory severance mandate.

How severance is taxed in Missouri#

Missouri operates a graduated individual income tax under RSMo § 143.011, with the top marginal rate at 4.7% for tax years 2025 and 2026. The rate has been on a multi-year glidepath under SB 3 of the 2022 Missouri Special Session (signed by Governor Parson October 5, 2022): 5.3% (2022) → 4.95% (2023) → 4.8% (2024) → 4.7% (2025 and 2026, the current holding rate) → 4.5% target by 2027 conditioned on revenue triggers. The 2026 Missouri bracket structure phases from 0% (income up to $1,313) through eight marginal steps (1.5% / 2.0% / 2.5% / 3.0% / 3.5% / 4.0% / 4.5%) to the top 4.7% bracket on income above $9,191 (single; thresholds doubled for MFJ). Because Missouri uses a graduated structure, supplemental wages — severance, bonuses, commissions — are typically withheld using the regular tables; Missouri does not publish a separate flat supplemental withholding rate distinct from the regular brackets, which produces an effective ~4.7% rate for top-bracket severance-recipient earners. Missouri additionally allows Kansas City and St. Louis to levy a 1% earnings tax (Kansas City RSMo §§ 92.105–92.125; St. Louis RSMo §§ 92.111–92.117). On top of Missouri state and city withholding, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ).

Calculate your situation#

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FAQ#

Does Missouri require severance pay?

No Missouri statute requires private employers to pay severance. Missouri has no state mini-WARN that would mandate pay-in-lieu of notice. The only layoff-notice regime that carries teeth in Missouri is federal WARN (29 U.S.C. §§ 2101–2109), which requires 60 days advance notice (or back pay for missed days) at employers of 100+ for covered mass layoffs and plant closings — but WARN mandates notice, not severance. Severance is therefore employer-discretionary in Missouri unless your employment agreement, written severance plan, or company handbook makes it mandatory. Missouri is an at-will employment state.

How is severance taxed in Missouri?

Missouri operates a graduated individual income tax under RSMo § 143.011, with the top marginal rate at 4.7% for tax year 2026 (down from 4.95% in 2023 under SB 3 of the 2022 Special Session glidepath; target 4.5% by 2027 conditioned on revenue triggers). The 2026 brackets phase from 0% (income up to $1,313) through eight marginal steps (1.5% / 2.0% / 2.5% / 3.0% / 3.5% / 4.0% / 4.5%) to the top 4.7% bracket on income above $9,191 (single; doubled for MFJ). Because Missouri uses a graduated structure, supplemental wages (severance, bonuses, commissions) are typically withheld using the regular tables; Missouri does not publish a separate flat supplemental rate, producing an effective ~4.7% rate for top-bracket earners. Missouri additionally allows Kansas City and St. Louis to levy a 1% earnings tax on residents and on non-residents who work in the city. On top of Missouri state and city withholding, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ). Year-end Missouri liability is reconciled on Form MO-1040.

Does Missouri have a mini-WARN statute?

No. Missouri has no state-level mini-WARN that imposes employer notice obligations independent of federal WARN. The operative regime is federal WARN (29 U.S.C. §§ 2101–2109): 60 days advance notice at employers of 100+ for mass layoffs affecting 50+ at a single site that constitute at least 33% of the active workforce (or 500+ regardless of percentage). Notice goes to affected employees, the Missouri Department of Higher Education and Workforce Development (DHEWD) Rapid Response unit, and the chief elected local official. Federal WARN penalties: back pay and benefits for each day notice was not given (up to 60 days), plus a $500/day civil penalty payable to the local government. Missouri adds no shorter notice, no lower employer-size trigger, and no statutory severance mandate.

Does OWBPA apply in Missouri?

Yes. OWBPA is federal (29 U.S.C. § 626(f)) and applies in all states. If you are age 40 or older and your Missouri employer asks you to sign a waiver of age-discrimination claims under the ADEA in your severance agreement, the waiver is enforceable only if you receive at least 21 days to consider the agreement (45 days for group exits — a 'reduction in force' or 'exit incentive program'), and 7 days after signing to revoke. Group exits additionally require disclosure of the ages and job titles of all selected and non-selected employees in the decisional unit. The Missouri Human Rights Act (RSMo § 213.010 et seq.) separately prohibits age discrimination (40+ to age 70) by employers with 6 or more employees — a lower threshold than the federal ADEA's 20-employee minimum, so smaller Missouri employers are still covered by state law. A release of state-law age claims under MHRA does not require OWBPA-compliant 21/45/7 procedures, but the federal ADEA release portion still does.

Can I collect Missouri unemployment while receiving severance?

Missouri has a distinctive claimant-friendly rule on severance allocation. Under RSMo § 288.060(4), 'the claimant may, at his or her option, choose to have such payment included in the calendar quarter in which it was paid or choose to have it prorated equally among the quarters comprising the base period.' This is unusual — most states allocate severance based on employer designation rather than letting the claimant choose. In practice, the Missouri Division of Employment Security (within DHEWD) treats severance as remuneration affecting eligibility, but the claimant's RSMo § 288.060(4) option to allocate provides meaningful flexibility for benefit-year calculation purposes (especially when severance is paid late in a calendar quarter and would otherwise push base-period wages above eligibility thresholds). Practical takeaways: (a) file your Missouri UI claim with DES on or shortly after your last day worked at uinteract.labor.mo.gov to establish your benefit year; (b) fully disclose the severance amount, structure, and any employer designation when you apply and on weekly certifications — failure to report severance is fraud; (c) elect the RSMo § 288.060(4) allocation method that maximizes your benefit; (d) Missouri's UI maximum weekly benefit amount is in the $320 range for 2026 — verify the live figure at labor.mo.gov.

Are non-competes enforceable in Missouri after a layoff?

Often yes if reasonable. Missouri non-compete law is statutory and judicial. RSMo § 431.202 (effective 2001) specifically addresses non-solicitation and confidentiality agreements — it provides that reasonable post-employment non-solicitation covenants in writing supported by consideration are enforceable as ancillary to legitimate business interests. For pure non-competes, Missouri's framework is common-law: a covenant is enforceable if (1) ancillary to a legitimate business interest (trade secrets, confidential information, customer relationships, goodwill), (2) reasonable in time, (3) reasonable in geographic scope, and (4) reasonable in scope of restricted activities — Missouri's leading case is Healthcare Services of the Ozarks, Inc. v. Copeland, 198 S.W.3d 604 (Mo. 2006). Missouri courts have judicial blue-pencil authority to narrow overbroad covenants. Practical takeaway: in Missouri, a post-separation non-compete reasonable in time, place, and scope is generally enforceable — so the non-compete release clause in your severance offer has real value. Have an attorney review duration, geography, and scope before signing.

How does Missouri's RSMo § 288.060(4) claimant-choice rule actually help?

RSMo § 288.060(4)'s claimant-choice severance allocation is unusual among state UI systems and can meaningfully affect benefit calculations. Most states' UI systems either follow employer designation (Tennessee, Kentucky, Michigan, Indiana, Kansas, Nebraska) or apply a fixed rule based on the type of payment (Iowa fully deductible, California Cal. UI Code § 1265 not deductible, etc.). Missouri's § 288.060(4) lets the claimant choose between two methods: (a) attribute the entire severance to the calendar quarter in which it was paid, or (b) prorate it equally among the four quarters comprising the base period. Concrete example: suppose your base period is the four quarters before separation, your high quarter wages were $25,000, and your severance is $40,000 paid in the quarter immediately after separation. If Missouri treated severance as part of the base period and you chose proration, $10,000 ($40,000 / 4) would be added to each base-period quarter — possibly pushing your high quarter wages above the maximum-WBA threshold and thereby capping your weekly benefit at the maximum. If instead you chose to include the severance only in the quarter paid (post-separation), your base-period wages remain unaltered. The right choice depends on Missouri's specific UI formula, the base-period composition, and the timing — work the math both ways before electing.