Bill > HB198

This bill modifies Missouri's income tax laws by adding a new provision that would fully exempt tips from state income tax for tipped employees starting in tax year 2026. Specifically, the bill allows tipped employees to subtract 100% of their tips from their federal adjusted gross income when calculating their Missouri state income tax. The bill defines "tip" using the federal Fair Labor Standards Act definition, which generally refers to discretionary payments made by customers to service workers. The legislation also specifies that employers would not be required to withhold state income tax on tips except as mandated by federal law. This change aims to provide a tax benefit to workers in industries where tipping is customary, such as restaurants, bars, and other service-oriented businesses, by eliminating state income tax on tip income. The bill represents a significant tax break for tipped workers, potentially increasing their take-home pay by removing state tax obligations on tips.

https://house.mo.gov/Bill.aspx?bill=HB198&year=2025&code=R