Moving from Canada to Missouri: A Falling Top Rate, City Earnings Taxes in Kansas City and St. Louis

St. Louis (Boeing's defence business, Centene, Edward Jones, Washington University) and Kansas City (Oracle Health, Hallmark, the federal reserve bank, the KC Fed) recruit Canadians in finance, healthcare, technology, and defence. Missouri's tax picture is a graduated income tax whose top rate has fallen to about 4.7% and is scheduled to fall further, a 1% earnings tax in both major cities, moderate property tax, and high combined sales tax.

Key takeaways

• Missouri's graduated income tax tops out at about 4.7%, with further cuts scheduled under revenue triggers.
• Kansas City and St. Louis each levy a 1% earnings tax on residents and on non-residents who work in the city.
• Combined sales tax runs 8% to 10% in the major metros.
• Property tax is near 1% effective.
• No estate tax. Missouri exempts Social Security and allows a public pension exemption.

The Canadian departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the day you leave. Canadian real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 to defer tax on illiquid assets. The rate is your province's: on a $300,000 unrealized gain, roughly $72,000 from Alberta and $80,000 from Ontario, Quebec, or BC. Provincial health coverage ends around your departure date; confirm the exact date with your plan and arrange US coverage to start the same month.

US federal side

Dual-status return in the arrival year, FBAR on Canadian accounts above $10,000 aggregate, Form 8938 above thresholds, and the RRSP treaty deferral federally. The TFSA loses its tax-free status the day you become a US person; close it before crossing. Equity compensation vesting after the move is split by working days between Canada and the US.

Missouri's side

Graduated income tax topping out at about 4.7%, with scheduled reductions tied to revenue growth; 1% earnings tax in Kansas City and St. Louis on residents and on non-residents working in the city; 4.225% state sales tax plus local rates that reach 8% to 10% in the metros; property tax near 1% effective; no estate tax. Missouri starts from federal AGI, fully exempts Social Security, and allows a public pension exemption and a partial private pension exemption.

The RRSP

Federally deferred under Article XVIII of the treaty and deferred for Missouri because the state starts from federal AGI. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, a US foreign tax credit federally, and Missouri's graduated rates after any pension exemption. CPP and OAS, treated like Social Security under the treaty, are exempt from Missouri tax.

Who makes this move

Canadian defence engineers to Boeing's St. Louis defence business, Canadian healthcare and insurance professionals to Centene and the St. Louis and Kansas City health systems, Canadian finance staff to Edward Jones and the Kansas City Fed, Canadian health-tech professionals to Oracle Health in Kansas City, and Canadian academics to Washington University.

Worked example

A Toronto defence engineer moves to St. Louis County on June 30 with $200,000 of unrealized gain in a non-registered account, $450,000 in an RRSP, and a Toronto condo sold in the departure year.

• Departure tax. $200,000 gain, $100,000 taxable, at about 53.5%: roughly $53,500.
• Condo. Sold as a resident under the principal residence exemption.
• RRSP. No tax on departure; federal and Missouri deferral.
• St. Louis County. State about 4.7%; no city earnings tax outside the City of St. Louis. Combined top rate about 41.7%. HST 13% becomes sales tax about 9%. Property tax on a $450,000 home around $4,500.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

"The individual income tax rate for tax year 2025 is 4.7%." — Missouri Department of Revenue, 2025 Individual Income Tax Year Changes, https://dor.mo.gov/taxation/individual/tax-types/income/year-changes/

"You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that." — Internal Revenue Service, Substantial Presence Test, https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

Practitioner note

Missouri's city earnings tax follows both where you live and where you work: a St. Louis County resident working downtown pays the 1%; one working in Clayton does not. In Kansas City the state line matters too, because a Kansas resident working in Kansas City, Missouri, pays it. We run the address and the office together.

See also: Weighing Florida instead? See the Canada-to-Florida guide. Browse every corridor by city, province, and state.

Next step

Fairlight prepares the Canadian departure return, the first-year federal and state returns, and ongoing cross-border filings. See cross-border pricing or book a call.