No. SaaS (software as a service) is not taxable in Missouri, under the state’s statute 12 CSR 10-109.050. Most digital goods are not subject to sales tax in Missouri, with the exception of prewritten software delivered via a tangible medium, which is taxable in the state.
This guide explains the rules surrounding the taxation of SaaS in more detail, as well as why compliance with sales tax requirements is essential.
Why compliance matters
A state can require a business to collect sales tax on its behalf, in certain situations when the business has established a presence there (this is known as having nexus in a state — more on this later).
In order to determine whether you are required to collect tax when you sell your products or services to buyers in a particular state, you need to know the total amount or volume of goods and services you've sold within the state's borders as well as the taxability status of those goods and the customers purchasing them.
Because you need to both track your sales and collect sales tax payments on eligible items, you must know whether SaaS is taxable in the states where you have customers. Failure to comply with tax regulations could lead to audits and penalties.
Taxation rules in Missouri
Missouri addresses the taxation of software in statute 12 CSR 10-109.050.
This statute describes SaaS as "a model for enabling ubiquitous, convenient, and on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction."
The statute makes clear that SaaS is not personal property that is subject to sales tax. However, the statute also says that if any tangible personal property is used to provide the service, then sales tax should be collected.
Missouri also excludes customized software from taxation, although canned software, or off-the-shelf software that is not designed for any particular user, can be taxed if it is delivered via a physical medium such as a USB drive or a CD.
The purchase of software installation services, training on software use, or maintenance services can be taxed if buying the installation, training, or maintenance services is mandatory with the purchase of the canned software, or if the training or services are delivered on a physical medium.
Missouri lawmakers have tried to make SaaS taxable in the past, but they have faced challenges. Missouri voters approved a constitutional amendment in November 2016 that prohibited taxation of any new services or transactions not subject to tax on January 1, 2015.
Senate Joint Resolution 33 was put forth to try to modify "a provision prohibiting sales taxes levied on transactions not taxed as of January 1, 2015, by providing an exception for sales and use taxes on subscriptions, licenses for digital products, and online purchases of tangible personal property," but was unsuccessful. So, as of 2025, SaaS and other digital goods remain non taxable in the state.
While Missouri doesn’t tax SaaS, you might still want to think about compliance
Although Missouri does not tax SaaS, most companies that sell SaaS operate throughout the U.S., and you need to know the rules for sales tax in all the states where you do business.
This is especially important as SaaS is taxable in the U.S. at the state level, the local level, or both in around half of all states, according to Numeral's research. You could be obligated to pay tax on sales in those states, depending on whether you have nexus.
For example, in neighboring Iowa, SaaS and digital goods are subject to sales tax.
Understanding nexus
Having nexus in a state means that you are required to collect tax on eligible sales there. Nexus can be physical or economic.
Physical nexus is simply a physical presence — for instance, an office, inventory, or employees — within a state's borders.
In the past, nexus could be established only by a physical presence. But in 2018, with a ruling in South Dakota v. Wayfair, Inc., the U.S. Supreme Court allowed states to set thresholds for economic nexus. These nexus thresholds vary from state to state, but they are based on sales revenue and/or the number of separate sales within a state.
The Missouri Department of Revenue sets forth the rules for establishing nexus. Under Missouri law, physical presence is defined to include:
- Owning or leasing real or tangible personal property in Missouri.
- Having employees, agents, brokers, independent contractors, or others who live in or regularly come to Missouri on behalf of your company.
Economic nexus, on the other hand, is established when your company has gross receipts for the sale of goods in Missouri totaling more than $100,000 in the prior 12-month period.
Every state has its own rules for establishing nexus, and the rules in other places where you do business may not be the same as Missouri's. Once you have established nexus in any state, you are subject to its sales tax rules. At that point, you need to determine whether SaaS is taxable and, if it is, whether your business must tax it at the correct rate when you sell your software to customers within the state's borders.
Staying compliant nationwide
Businesses that sell goods or services over the Internet face unique challenges, because of the need to track nexus in every state where they have buyers. Those selling SaaS and digital goods have the added complexity of determining whether the items they sell are even taxable in each particular jurisdiction.
While this can be annoying, it’s important because failure to comply with all of your tax obligations can have serious consequences, including audits, fines, and penalties.
Your company will need to track your transactions and your physical connections with states, and if you establish nexus in one, you'll need to:
- Register to file for sales tax.
- Collect tax on taxable items, including SaaS, if it is taxable in the state.
- File tax forms on the required schedule, which could be monthly, quarterly, annually, or biannually, depending on the state's rules and your sales volume.
- Remit the tax amounts you’ve collected.
Managing all of these steps, including tracking nexus, can be time-consuming and difficult. However, you can make it simple by using Numeral, which takes care of sales tax compliance for you.
Numeral will monitor your connections with each state to determine whether you have nexus, and it can register with states for you. Numeral can also collect the correct amount of tax on taxable items and remit payments. You won't have to think about sales tax or navigate its complexities if you let Numeral handle compliance on your company's behalf.
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Additional resources for staying compliant
Since Missouri has considered changes to the rules on taxation of SaaS, it's important to keep up-to-date on state laws and regulations. There are many resources that can help, including:
- Missouri Department of Revenue
- Missouri Department of Revenue Detailed Instructions and Information Book
- Use Tax Guide for Columbia, Missouri
- Kansas City Missouri Tax Guide
Final thoughts
While SaaS is not taxable in Missouri, it is in many other states.
To maintain compliance, you must keep track of where you have nexus, ensure that you are registering where ands when required, keep track of the tax rules for different states, and monitor for updates, or let Numeral do all of this for you.
If you don't want to worry about making tax mistakes or missing a change in the rules and finding yourself the subject of an audit that shows you owe, reach out to Numeral today to see how we help SaaS companies and e-commerce sellers maintain compliance in mere minutes each month.
