Mississippi will gradually eliminate its income tax while reducing the grocery tax and raising the gas tax under a bill Gov. Tate Reeves signed into law on Thursday.
In addition to cutting grocery and income taxes, House Bill 1 will also prevent liabilities from growing in the Public Employees’ Retirement System by reducing benefits for future employees.
During the signing ceremony, Reeves reflected on the decade of work it took for the Mississippi Legislature to eliminate the income tax—work that started when he was the lieutenant governor and president of the Senate in 2015.
“This is more than a policy victory. This is a transformation, and it’s a transformation that I have believed in, fought for and worked toward for many years,” he began. “From my days as lieutenant governor to my first campaign for this office and every legislative session since, I have made this my mission because I believe in a simple idea: that government should take less so that you can keep more, that our people should be rewarded for hard work, not punished. And that Mississippi has the potential to be a magnet for opportunity, for investment, for talent and for families looking to build a better life.”
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Under House Bill 1, income tax rates for Mississippians who make more than $10,000 will fall from 4.4% in 2025 to 4% in 2026; the rate would drop to 3.75% in 2027 and by an additional 0.25% each year until the tax rate equals 3% in 2030.
Mississippi Sen. Josh Harkins, R-Flowood, said reducing the income tax from 4% to 3% would result in a $407-million revenue loss for the State.
Starting in 2031 under the plan, if the State’s surplus in revenue from the previous was greater than 85% of $407 million, the State will further reduce the income tax by 0.20%. If the surplus is 100% of $407 million, the State will reduce the income tax by 0.25% after 2031. The State will reduce the income tax by 0.30% if
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