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Live in Missouri, Work in Iowa: Which State Taxes Your Paycheck?

Both states — credit offsets the double taxIowa withholds

Answer

Two returns, one credit. Iowa has the first claim on wages earned inside the state and withholds accordingly. Missouri then taxes you as a resident on everything and gives credit for what Iowa already took, capped at what Missouri would have charged on that same income.

Last verified

Two states can lawfully tax the same wages: Iowa because the work happened there, Missouri because you live there. Nothing prevents the overlap in advance — it is unwound afterwards, on the Missouri return, through the credit for taxes paid to another state.

A Missouri resident taxed by another state on the same income claims the credit for taxes paid to other states on Form MO-CR. The credit is capped at the Missouri tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.

Iowa also has a layer below the state one, and it is the layer that survives every agreement: Many Iowa school districts levy a surtax calculated as a percentage of state income tax. It is reported on the state return rather than separately.

What you file

  1. 1Nonresident return · IowaForm IA 1040 with Schedule IA 126

    File the Iowa nonresident return FIRST — you need the Iowa tax figure before you can complete Missouri.

  2. 2Resident return · MissouriForm MO-CR

    File a Missouri resident return reporting all income, then claim the credit for tax paid to Iowa. The credit is capped at what Missouri would have charged on that same income, so if Iowa taxes it at a higher rate the difference is not refunded.

The two states, side by side

 MissouriIowa
Taxes wagesYes — graduatedYes — flat
Reciprocity partnersNone1 (Form 44-016)
Convenience ruleNoNo
Nonresident returnForm MO-1040 with Form MO-NRIForm IA 1040 with Schedule IA 126
Credit for other-state taxForm MO-CRForm IA 130
Nonresident safe harbourNone publishedNone published
Local income taxYesYes
Revenue departmentMissouri Department of RevenueIowa Department of Revenue
Last verified

The other direction

Reversing the commute does not always reverse the answer. Living in Iowa and working in Missouri gives:Both states — credit offsets the double tax.

Iowa to Missouri →

Same two states, different situation

The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.

Other Missouri pairs

Questions people actually ask

I live in Missouri and work in Iowa. Which state takes the tax out of my paycheck?

Two returns, one credit. Iowa has the first claim on wages earned inside the state and withholds accordingly. Missouri then taxes you as a resident on everything and gives credit for what Iowa already took, capped at what Missouri would have charged on that same income.

Which state should my employer be withholding for?

Iowa. The wages are sourced to Iowa, so Iowa withholding is correct and there is no Missouri withholding to set up.

Will I end up paying tax twice on the same income?

Not twice over, but you will pay the higher of the two rates. Missouri gives residents a credit for tax paid to Iowa on the same income, claimed on Form MO-CR. The credit is capped at the Missouri tax on that income, so if Iowa taxes it more heavily the excess is not refunded by either state.

How current is this?

The Missouri and Iowa rules on this page were last checked against Missouri Department of Revenue and Iowa Department of Revenue on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.

Sources

Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.