State Policy Network
Mississippi passes historic tax cut to help workers and their families

After dominating Mississippi’s legislative session for two years, lawmakers passed the largest tax cut in the state’s history. On Sunday, the Mississippi Legislature passed a bill that cuts the state personal income tax rate over four years. The bill is on its way to the Mississippi Governor, who is expected to sign it.

Before we get into the details on what Mississippi’s tax cut does, it might be helpful to refresh your memory on how income taxes work. As the name suggests, a personal income tax is a tax on the amount of money an individual or a family earns. The federal government and most state governments implement an income tax. Most states have a flat income tax or a progressive income tax—and nine states don’t have an income tax at all. Like many states, Mississippi has a progressive income tax, which means people with higher incomes are taxed more than people with lower incomes.

Under Mississippi’s current system, the state does not tax the first $5,000 a person earns. Under the bill passed by the Legislature, and starting in 2023, the state will not tax the first $10,000 a person earns. In 2024-2026, the state will reduce the tax rate on income above $10,000 from five percent to four percent.

As the Clarion Ledger pointed out, in 2026 (when the measure is fully implemented), a Mississippi worker who makes $40,000 per year will see their taxes reduced by $417 a year. A married couple making $80,000 would save $834 a year. Over the next four years, the legislation will cut more than $500 million in taxes for Mississippi families.

Mississippi’s tax cut will help hardworking families cope with the rising cost of living

Millions of Americans across the country are coping with historic inflation that has increased the prices of gas, food, furniture, and everything in between. This new tax cut will allow Mississippi workers to keep more of the money in their paychecks so they can pay for these basic goods.

In an op-ed for RealClearPolicy, Mississippi Center for Public Policy President and CEO Douglas Carswell added:

“As the price of everyday items from gas to groceries skyrockets, it is great to see our state’s leaders taking practical steps to help folks cope with the cost of living. Letting Mississippians keep more of their own money means that they will have more to spend on themselves, their families and in their own communities. 

Reducing the personal income tax will also make Mississippi a more attractive state to work and set up a business. Empower Mississippi President Russ Latino noted: “Creating a simple, lower flat tax will make us more competitive across the region and put money back into the pockets of the people who earned it.”

Empower Mississippi and the Mississippi Center for Public Policy’s multiyear efforts help lawmakers adopt this cut

Both Empower Mississippi and the Mississippi Center for Public Policy—two policy organizations in the state and members of State Policy Network, played a pivotal role in getting the state to adopt an income tax reduction.

Empower Mississippi has spent two years building the case and need for substantive tax reform in Mississippi. The organization issued the first dynamic economic modeling of income tax elimination plans and testified at joint legislative hearings. Empower also engaged the media on the benefits of tax reform in more than 1,000 media placements. In addition, Empower helped persuade the public through blog content and social media, and activated Mississippi citizens to send more than 9,200 emails in support of tax reform.

The Mississippi Center for Public Policy also helped lawmakers and the public see the importance of reforming the state’s tax code. Like Empower, MCPP worked to not just reduce the income tax but eliminate it completely. Through research, videos, op-eds, and outreach to lawmakers, MCPP made the case for abolishing the income tax in Mississippi. While MCPP is encouraged to see the income tax rate reduced, they hope this is the first step towards fully eliminating the income tax in Mississippi. MCPP President and CEO Douglas Carswell added: “This is a good first step, but it is not full income tax elimination. Under this proposal, in 2026 the legislature will still need to agree further reductions.” 

Additional Reading

House and Senate Leaders Reach Historic Tax Cut Deal
Empower Mississippi

Mississippi Senate And House Reach Income Tax Deal—Cautious Welcome
Mississippi Center for Public Policy

Mississippi Joins the Tax Cutters
The Wall Street Journal Editorial Board

Mississippi Lawmakers Pass The Largest Tax Cut In State History
Clarion Ledger

Mississippi Lawmakers Pass Largest-Ever State Income Tax Cut
The Associated Press

Organization: State Policy Network