Mississippians may soon have lower grocery and income tax rates while paying more for gas under a bill the Mississippi Senate passed on Monday.
In total, the tax reductions would add up to a net income and grocery tax cut of $538 million over five years while bringing in about $212 million yearly in revenue from the additional gas tax if Senate Bill 3095 becomes law.
“I think we’re lowering the burden on Mississippi families. We’re creating a scenario where they’re going to be able to keep more of their hard-earned money, and they’ll be able to choose how they spend it,” the bill’s author, Sen. Josh Harkins, R-Flowood, told reporters on Monday after senators passed S.B. 3095.
Mississippians who make more than $10,000 a year could see their income tax rate go from 4.7% in 2024 to 2.99% in 2030, declining by 0.25% each year until 2030 under the legislation. The Senate’s tax-reform plan says the Legislature would have to review the income tax plan before 2030 to decide whether to adjust the tax rate further.
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Mississippi has the highest grocery tax in the nation among the 12 states that place a sales tax on groceries; the state’s grocery tax rate would go from 7% to 5% starting July 1, 2025, if the legislation becomes law.
The state’s grocery tax revenue goes to municipalities, education, infrastructure and the State’s general fund. The Legislature would increase diversions from the grocery tax to these areas, so agencies’ budgets would not decrease if the bill becomes law, Harkins said. Municipalities currently get 18.5% of the general sales tax revenue and would also get 25.9% of the grocery tax revenue under Section 11 of S.B. 3095.
“No budget takes a cut from the reduction of grocery tax,” Harkins said on the Senate floor on Monday.
Any municipality that has more than 150,000 residents can impose a “special sales tax” of no more than 1% of the “gross proceeds of sales or gross income of the business”