Does Missouri Tax Overtime? (w/Examples) + FAQs

This article reflects federal rules and Missouri rules as of June 2026 and covers tax year 2025 (the return you file in 2026). Tax law changes — confirm current figures before you file.

Quick Answer

Yes — Missouri taxes your overtime pay. Missouri offers no “no tax on overtime” break for tax year 2025. The new federal overtime deduction (up to $12,500, or $25,000 joint, for 2025–2028) lowers only your federal tax. Missouri starts from your federal income but does not allow it.

What This Means for You

If you pulled extra shifts in 2025 and heard that overtime is now “tax-free,” here is the part that catches Missouri workers off guard: that break lives in federal law only. Your overtime still counts as taxable income on your Missouri return, so your Show-Me State tax bill does not shrink one dollar because of it. The Missouri Department of Revenue states plainly that the new federal deductions “cannot be claimed on the Missouri individual income tax return.”

The stakes are real and the timing is tight. Your 2025 Missouri return is due April 15, 2026, and roughly 80 million U.S. workers are paid hourly, per the U.S. Bureau of Labor Statistics — many of them in Missouri factories, hospitals, and warehouses who expect a state refund bump that is not coming. Knowing the split now keeps you from overestimating your refund or underpaying.

Here is what you will learn:

💵 Exactly how the federal “No Tax on Overtime” deduction works, with real dollar math.
🚫 Why Missouri does not follow it, in plain English.
🧾 A worked example showing your real federal savings and your unchanged Missouri tax.
🗺️ How Missouri compares to Illinois, Kansas, and no-tax Tennessee.
⚠️ The mistakes that cost Missouri workers money — and how to dodge them.

The Two Layers: Federal vs. Missouri

Overtime tax now has two separate layers, and confusing them is the single biggest mistake Missouri workers make. The federal layer changed in 2025. The Missouri layer did not. You must read your paycheck and your two tax returns as two different stories.

The federal layer comes from the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. Under the IRS guidance on the new deduction, workers can deduct the extra “half” portion of time-and-a-half overtime required by the Fair Labor Standards Act. This is an income-tax deduction, not a full exemption, and it is temporary — it runs for tax years 2025 through 2028 and then disappears unless Congress extends it.

The Missouri layer is built on conformity. Missouri’s income tax begins with your federal adjusted gross income (AGI). The federal overtime deduction is taken below AGI as a special deduction, so it never lowers the number Missouri starts from. On top of that, Missouri law has no matching statute, which the Department of Revenue confirmed directly. The result: the overtime stays fully taxable in Missouri.

What “qualified overtime” actually means

Not every extra hour counts, even federally. The deduction covers only the premium portion of overtime required by the FLSA — the half-time above your normal rate, not the whole overtime check. So on a $30/hour job that pays $45/hour for overtime, only the $15 premium per hour is deductible federally, not the full $45.

The consequence of misreading this is overstating your federal deduction and triggering an IRS adjustment. A common misconception is that “all my overtime is now tax-free.” It is not — overtime is still taxed, you just get a deduction on the federal premium. What you should do: wait for the new box on your 2025 Form W-2 showing total qualified overtime, and use that exact figure.

The federal dollar caps and phase-out

The federal deduction is capped at $12,500 for single filers and $25,000 for joint filers for tax year 2025, per the IRS fact sheet. It also phases out once your modified adjusted gross income (MAGI) tops $150,000 (single) or $300,000 (joint).

Missing the phase-out costs higher earners part of the break. The deduction drops by $100 for every $1,000 of MAGI above the threshold, per IRS guidance summaries. A misconception is that the cap is “extra pay” — it is the maximum amount you can subtract, not a payment. What to do: estimate your MAGI before you file so you know your true federal deduction, then remember none of it helps in Missouri.

Worked Example: Federal Savings vs. Missouri Tax

Meet Carla, a single registered nurse in Springfield, Missouri. In 2025 she earned $62,000 in regular wages plus $8,000 in qualified overtime premium pay. Her MAGI is under $150,000, so she gets the full federal deduction.

Here is the federal side. Carla’s $8,000 of qualified overtime premium is under the $12,500 cap, so she deducts the full $8,000 on her federal return. If she sits in the 22% federal bracket, that deduction saves her about $1,760 in federal tax ($8,000 × 22%).

Here is the Missouri side. Missouri starts from her federal AGI, which does not include the overtime deduction, so all $8,000 of overtime stays taxable in Missouri. At Missouri’s top 2025 rate of 4.7%, that overtime adds about $376 to her Missouri tax — and the federal deduction changes none of it. Carla’s net result: real federal savings, zero Missouri relief.

Which Situation Applies to You?

Your answer depends on who you are. Find your row below, then read the section that fits.

Missouri hourly W-2 worker: You get the federal deduction (if eligible) but no Missouri break. Focus on the worked example and the W-2 box.
Married couple, both working overtime: Your joint cap is $25,000 federally; you must file jointly to claim it, per the IRS rules. Missouri still taxes all of it.
High earner (MAGI over $150,000): Your federal deduction phases out; check the phase-out section. Missouri taxes overtime regardless of income.
Salaried/exempt employee: If you get no FLSA-required overtime, you likely get no deduction at all, federal or state.
Missouri employer or payroll manager: Your job is correct W-2 reporting, covered in the deadlines section below.

Three Common Scenarios

These three situations cover most Missouri overtime questions. Each shows the action and the tax result.

Hourly factory worker claiming the federal deduction

Your Move	The Tax Result
Deduct $5,000 qualified overtime on your federal return	Federal taxable income drops $5,000; Missouri taxable income unchanged
Expect a Missouri refund boost	No boost — Missouri taxes the full overtime at up to 4.7%

Married couple filing separately

Your Move	The Tax Result
File married filing separately to “split” overtime	Federal deduction is lost — joint filing is required
Assume Missouri offers its own break	Missouri taxes all overtime; no state deduction exists

Worker who skips the new W-2 box

Your Move	The Tax Result
Guess your overtime amount instead of using the W-2 figure	Risk of IRS adjustment, delayed refund, or denied deduction
Forget to enter a Social Security Number	Federal deduction denied per IRS eligibility rules

Named Examples

Devon, a single warehouse worker in Kansas City, earned $4,200 in qualified overtime premium in 2025. He deducts the full $4,200 federally and, in the 12% bracket, saves about $504 in federal tax. On his Missouri return, that same $4,200 is taxed at roughly 4.7%, adding about $197 — so his net cost in Missouri is unchanged by the new law.

Maria and Luis, a married couple in St. Louis, each worked heavy overtime and earned $14,000 combined in qualified overtime premium. Filing jointly, they deduct the full $14,000 federally, under the $25,000 joint cap. Missouri taxes all $14,000, adding about $658 to their state bill, because Missouri has no matching deduction per the Department of Revenue.

Theresa, a single hospital tech earning $170,000 MAGI, hits the federal phase-out. Her $12,500 maximum is reduced by $2,000 ($20,000 over the $150,000 threshold × $100 per $1,000), leaving a $10,500 federal deduction. In Missouri, none of her overtime is deductible at any income level.

Missouri vs. Neighboring States

Missouri is not alone, but it is not the friendliest either. The table compares how each state treats overtime for tax year 2025.

State	How Overtime Is Taxed
Missouri	Taxed at up to 4.7%; no state overtime break, per the Missouri DOR
Tennessee	No state income tax, so overtime is never taxed at the state level
Illinois	Flat 4.95% income tax; rolling federal conformity, but the federal deduction is below-the-line, per the Illinois DOR
Kansas	Graduated tax up to 5.58%; starts from federal AGI, per the Kansas DOR

The key takeaway: Tennessee workers escape state tax on overtime entirely, while Missouri, Illinois, and Kansas all tax it because their returns begin with federal AGI, which sits above the new overtime deduction line.

How to Claim the Federal Deduction

Even though Missouri gives nothing, you should still claim the federal break. Here is the process and the records you need.

First, get your 2025 Form W-2. Employers must report total qualified overtime compensation, per the IRS reporting rules. Use that exact number — do not estimate.

Second, claim the deduction on your federal Form 1040. The deduction is available whether or not you itemize, so most filers can take it. You must include your Social Security Number and, if married, file jointly. Learn the basics in our How to Fill Out Form 1040 guide.

Third, file your Missouri Form MO-1040 normally. There is no Missouri line to subtract overtime, so you simply report your federal AGI as the starting point. For related state breaks, see our Missouri capital gains subtraction guide.

Deadlines, Costs, and Timing

The 2025 Missouri return is due April 15, 2026, with an extension deadline of October 15, 2026. The federal return shares the April 15, 2026 deadline. Missing these triggers penalties and interest on any unpaid Missouri tax.

Cost-wise, claiming the deduction yourself is free with most tax software, which now supports the new overtime box. A paid preparer typically charges $150–$400 for a wage-earner return. If you have multiple jobs, large overtime, or a MAGI near the phase-out, a CPA or enrolled agent is worth the fee to avoid leaving the deduction on the table or overstating it.

Mistakes to Avoid

These errors cost Missouri overtime workers money every filing season.

Assuming Missouri exempts overtime. It does not — you may underestimate your state tax and owe a balance at filing.
Deducting your full overtime check federally. Only the FLSA premium qualifies; overstating it can trigger an IRS adjustment.
Filing married filing separately. This wipes out the federal deduction, per the IRS eligibility rules.
Forgetting your Social Security Number. The IRS denies the deduction without it.
Guessing the overtime figure. Using anything but the W-2 amount risks delays or denial.
Ignoring the phase-out. High earners who claim the full $12,500 may face a corrected, smaller deduction and a bill.
Expecting the break after 2028. The deduction sunsets after tax year 2028 unless extended, so do not plan multi-year budgets around it.

Do’s and Don’ts

A quick checklist before you file.

Do claim the federal deduction if eligible — it is free money you have earned, the why being real tax savings.
Do use the exact W-2 overtime figure, because the IRS matches it to your return.
Do file jointly if married, since separate filing forfeits the break.
Do check your MAGI against the phase-out so you claim the correct amount.
Do budget your Missouri tax as if overtime is fully taxable, because it is.
Don’t expect a Missouri refund increase — none is coming.
Don’t deduct your entire overtime pay; only the premium qualifies.
Don’t skip the deduction thinking it is “too small” — even $500 in savings matters.
Don’t rely on the break past 2028 without checking the law.
Don’t confuse the federal and Missouri rules, the why being they follow different math.

Pros and Cons of the New Overtime Rule

A balanced look for Missouri workers.

Pro: Real federal tax savings on overtime premium, often hundreds of dollars.
Pro: Available to non-itemizers, so most workers qualify.
Pro: Joint cap of $25,000 helps two-earner households.
Pro: Encourages picking up extra shifts with a lighter federal hit.
Pro: Simple to claim once the W-2 box is populated.
Con: No Missouri benefit, so half your tax picture is unchanged.
Con: Temporary — it sunsets after 2028, limiting long-term planning.
Con: Phase-out reduces or removes it for higher earners.
Con: Only the FLSA premium counts, not the full overtime check.
Con: Married-filing-separately couples are shut out entirely.

What to Do Next

Take these steps in order before you file.

Wait for your 2025 W-2 and find the qualified overtime box.
Confirm your MAGI is under $150,000 single or $300,000 joint to get the full federal deduction.
Claim the deduction on Form 1040, including your Social Security Number.
File Missouri Form MO-1040 expecting overtime to be fully taxed.
Save your pay stubs and W-2 for at least three years.
Call a tax professional if your overtime is large, you have multiple jobs, or your MAGI is near the phase-out.

This article is educational and is not a substitute for advice from a licensed tax professional for your specific situation.

FAQs

Does Missouri tax overtime pay? Yes. Missouri taxes overtime at its regular income tax rates, up to 4.7% for tax year 2025. The state offers no overtime deduction and does not follow the new federal break, per the Missouri Department of Revenue.

Is overtime tax-free in 2025? No. Overtime is still taxable. For 2025–2028, federal law gives a deduction on the overtime premium, up to $12,500 single or $25,000 joint — but it is not a full exemption and Missouri does not allow it.

How much overtime can I deduct federally? Up to $12,500 for single filers and $25,000 for joint filers for tax year 2025, covering only the FLSA-required premium portion, per IRS guidance.

Why doesn’t Missouri follow the federal overtime deduction? Conformity. Missouri starts from your federal AGI, and the deduction is taken below that line. Missouri also has no matching statute, so the overtime stays taxable.

Does the federal overtime deduction expire? Yes, after 2028. The deduction applies to tax years 2025 through 2028 and then ends unless Congress extends it.

Can married couples claim the overtime deduction in Missouri? No. No Missouri overtime deduction exists for any filing status. Federally, couples may deduct up to $25,000 but must file jointly.

What income disqualifies me from the federal deduction? MAGI over $150,000 single ($300,000 joint) starts the phase-out, reducing the deduction by $100 per $1,000 above the threshold, per IRS guidance.

Do I need my W-2 to claim it? Yes. Your 2025 W-2 will show total qualified overtime. Use that exact figure rather than estimating to avoid IRS adjustments.

Is my whole overtime check deductible federally? No. Only the premium — the “half” of time-and-a-half required by the FLSA — qualifies, not your full overtime pay.

Do other states tax overtime? Most do. Illinois and Kansas tax it because they start from federal AGI. Tennessee has no income tax, so it taxes no overtime.

What’s the Missouri filing deadline for 2025? April 15, 2026, with an extension deadline of October 15, 2026, per the Missouri Department of Revenue.

Should I still claim the federal deduction if Missouri won’t honor it? Yes. The federal savings are real and separate from your Missouri tax. Claiming it federally costs you nothing in Missouri.

Word count: approximately 2,050 words covering federal and Missouri rules for tax year 2025.

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