Missouri wants to charge you more to pay by credit card — without your say | Opinion
Sometimes the smallest rule changes hit your wallet the hardest. Missouri wants to tax your payment method. A new proposal from the state Department of Revenue would quietly start taxing not just what you buy, but how you pay.
According to a newly proposed rule, if you purchase a $50 item in Kansas City (where the combined sales tax rate is around 8.9%) and the store adds a $3 fee for using a credit card, the state now wants to calculate sales tax on $53. In other words, Missouri would tax the credit card convenience fee itself — not the merchandise or service, but the payment method.
Translation: Even convenience gets taxed. Turning a card surcharge into a taxable item stretches that understanding beyond basic logic.
Missouri’s base sales tax is 4.225% and local jurisdictions push the combined average to about 8.4% — even reaching a high as 11.99% in some areas such as Branson. So, on average, a $3 card surcharge would tack on another 25 cents in tax per transaction. That doesn’t sound like much until you multiply it by the hundreds of millions of credit card payments Missourians make every year — easily turning this so-called “technical change” into a tax hike of tens of millions of dollars.
And small businesses — particularly mom-and-pop stores throughout the Show-Me State — would get stuck in the middle. They’d be forced to upgrade their payment processing systems, explain to customers why a “checkout fee” now has tax added to it and, of course, face new audit risks. All this just to recover the same processing costs every merchant already pays to credit card networks.
That’s especially tone-deaf after governors and the General Assembly spent the last two years cutting income taxes to give families and businesses a break. You can’t claim to make Missouri more competitive on Monday and then sneak in a swipe tax on Tuesday. This move erases part of those hard-won savings without a single vote by elected officials.
The Missouri Constitution gives the legislature — not the bureaucracy — the power to decide what’s taxed. Expanding the sales tax base is a policy change, not a technical tweak, and it deserves public debate.
The state claims a credit card surcharge is part of the “sales price,” so the Department of Revenue can tax it without a vote from lawmakers. Sure, they say it’s allowed, but let’s call it what it is: government overreach. If the state believes surcharges on purchases should be taxed, then let’s have that discussion with lawmakers who answer to voters. Anything less undermines accountability and erodes public trust. Policymaking without permission isn’t modernization — it’s dictatorial.
Retailers add card surcharges for a reason: to show customers that credit card payments come with real costs. It’s an act of transparency, not trickery, and provides consumers with a choice: Pay cash and skip the fee, or pay by card and cover the cost of convenience. Pretty simple concept.
Some states, such as Illinois, have taken the opposite approach by capping or banning these fees. Even if well-intentioned, those policies are essentially price controls — and often backfire with higher overall prices, reduced flexibility and fewer options for small businesses.
Tax systems should treat people the same. But, under the proposed rule, two customers could buy the same $50 item, but only the one paying by card would owe tax on a $3 surcharge. That inconsistency undermines the fairness and predictability that good tax systems depend on.
Even states with very different philosophies, such as Colorado, have explicitly exempted these surcharges from sales tax when they’re disclosed and optional. Missouri should do the same. Sales taxes work best when they’re clear and consistent. This rule does the opposite, adding complexity, confusion and hidden costs.
Missourians deserve better than a stealth tax on convenience. If policymakers want to raise revenue, they should do it openly — not through bureaucratic sleight of hand. Lawmakers should step in, reassert the General Assembly’as authority over the tax code and stop this rule before it hits Missourians’ wallets.
Tax what you buy, not how you buy it.
Jess Ward is senior director of state affairs of the 501(c)(4) nonprofit National Taxpayers Union. She co-authored this with Mattias Gugel, its director of state external affairs.