Mississippi Tax Guide 2026

Personal income tax — phasing out entirely

Mississippi enacted historic HB 1 of 2022 (signed by Gov. Reeves) which collapsed the 3-bracket structure (top 5.0% on income > $10k) to a flat tax with scheduled reductions: • 2023: 5.0% flat • 2024: 4.7% flat • 2025: 4.4% flat • 2026: 4.4% maintained Then HB 1 of 2025 (signed by Gov. Reeves, March 2025) accelerated and EXTENDED the phase-out with a trigger system aimed at eliminating the income tax entirely by approximately 2040: • Annual 0.2% reduction when General Fund growth ≥ 85% of prior-year revenue AND state reserves are healthy • Once at 3.0%, mechanism transitions to a continued statutory cut path • TARGET: 0% income tax (full repeal) Mississippi would become the 10th no-income-tax state if the phase-out completes. Critics warn the trigger conditions may not consistently be met, and revenue replacement (likely higher sales tax) hasn't been fully designed. For 2026: 4.4% flat applies to all Mississippi taxable income after exemptions and deductions. The first $10,000 was previously taxed at 0% under old brackets; under the new flat structure, exemptions and SD shield comparable amounts. Social Security: 100% EXEMPT. Pension/retirement income: 100% EXEMPT — Mississippi is one of the most retiree-friendly states (Miss. Code §27-7-15(4)(d)).

Sales tax — among the highest, including groceries

State sales tax 7% (Miss. Code §27-65-17). Local sales tax is LIMITED in Mississippi: • Jackson (city): 1% local-option = 8% combined • Tupelo: 0.25% • Most cities: 0% local GROCERY TAX: 7% — Mississippi imposes the HIGHEST grocery tax rate in the US. No reduced rate, no exemption (most states either exempt or reduce). Bipartisan reform proposals to cut grocery tax to 5% have repeatedly stalled — opponents argue revenue loss is unaffordable without offsetting increases. This grocery tax is regressive — low-income Mississippi families spend roughly 11–15% of income on food, paying ~$700–$1,000/yr in grocery sales tax alone. Prescription drugs: exempt. Clothing: taxable. Farm equipment, tractors: reduced rate 1.5%. Manufacturing machinery: reduced rate 1.5%. Economic nexus (Miss. Code §27-65-17(1)(b)(iii)): $250,000 in cumulative sales — Mississippi has the HIGHEST nexus threshold of any state with a sales tax.

Property tax — among the lowest in the US

Statewide average effective ~0.67%. Hinds County (Jackson): ~0.78%, DeSoto (Memphis suburbs): ~0.84%, Harrison (Gulf Coast): ~0.69%, Madison: ~0.79%. Mississippi uses fractional assessment: • Class I (single-family owner-occupied): 10% of true value • Class II (other real property): 15% • Class III (personal property): 15% • Class IV (motor vehicles): 30% • Class V (public utilities): 30% Homestead exemption: regular $300 credit; $7,500 reduction in assessed value for non-disabled homeowners. ADDITIONAL homestead for disabled/elderly: full exemption from ad valorem property tax up to $75,000 of true value (Miss. Code §27-33-67). No state-level property tax; entirely local. Mississippi taxes motor vehicles annually as personal property (county-administered) — a significant 'hidden' tax for new-vehicle owners.

Business considerations

Corporate income tax: 4.4% flat (Miss. Code §27-7-5) — matches individual; trigger reductions apply in tandem. Franchise tax: 0.025% of capital (Miss. Code §27-13-5) — being phased out as well (HB 1 of 2016 reduced from 0.25% to 0.025% over 10 years; complete phase-out by approximately 2028). LLC fee: $50 annual report (Miss. Code §79-29-1203). Apportionment: single-sales factor for most industries. PTET: Mississippi enacted PTET via HB 1668 of 2022 — entity-level election at flat individual rate (4.4% 2026); refundable credit to owners. Unemployment tax: 0.20%–5.4% on $14,000 wage base. No estate, inheritance, or gift tax — Mississippi is among the simplest estate-planning jurisdictions.

Other taxes and outlook

Gaming tax: 8% on gross gaming revenue + 4% city/county = 12% effective on casino operators (Miss. Code §75-76-177). Motor fuels: $0.184/gal (18.4 cents) — middle of pack. The phase-out of the income tax raises long-term questions: revenue replacement comes primarily from continued reliance on the regressive sales tax (7% on groceries) and from gaming and tourism revenues. If income tax reaches 0%, Mississippi would join FL/TN/TX/SD/WY/NV/AK/NH/WA in the no-income-tax club — but with significantly higher sales tax than most of those peers. The state pension tax exemption + full Social Security exemption + low property tax + (eventually) no income tax makes Mississippi an emerging retiree destination, particularly along the Gulf Coast.

Worked example: Charles Robinson, Jackson-area retiree (single, age 70, 2026)

Charles receives $24,000 Social Security, $36,000 from a former corporate pension, and $20,000 of Traditional IRA distributions. Owns a $185,000 Jackson home.

Federal: Social Security partially taxable, IRA fully ordinary, pension fully ordinary → moderate federal liability. Mississippi: Social Security: 100% exempt (§27-7-15(4)(d)) Pension: 100% exempt (qualified retirement income) IRA: 100% exempt (qualified retirement income) Mississippi AGI: $0 Tax: $0 Property tax on $185k home (Class I, 10% assessment) — assessed value $18,500 × consolidated millage ~$140 per $1,000 = ~$2,590, less $300 homestead credit → ~$2,290/yr Sales tax burden: 7% on most goods, including groceries (~$700/yr on $10,000 grocery spend). Mississippi total state income tax: $0 — fully tax-free retirement income. Total annual state + local burden (income tax + property + estimated sales): ~$3,000.

Statute references

• Personal income tax 4.4% flat — Miss. Code §27-7-5 (HB 1 of 2022 + HB 1 of 2025)
• Pension/retirement income exemption — Miss. Code §27-7-15(4)(d)
• Personal exemption $6,000 single — Miss. Code §27-7-21
• Sales tax 7% — Miss. Code §27-65-17
• Economic nexus (Wayfair) $250k — Miss. Code §27-65-17(1)(b)(iii)
• Disabled/elderly full homestead — Miss. Code §27-33-67
• Franchise tax (phasing out) — Miss. Code §27-13-5
• Gaming tax — Miss. Code §75-76-177

Related pages

• State Tax Comparison →
• Retirement Planner →
• PTET Analyzer →