Mississippi Tax Guide: Moving Toward Flat Tax

Tax Overview

Mississippi has been undergoing significant income tax reform, transitioning toward a flat tax rate. The state eliminated its lowest bracket and has been reducing rates, targeting a flat 4% rate. Previously, Mississippi had a progressive system with rates from 3% to 5%. The first $10,000 of taxable income is now exempt from tax, providing meaningful relief for lower-income residents.

Sales tax in Mississippi is 7% at the state level, one of the higher rates in the nation. Local taxes are limited, so the combined rate stays close to the state rate in most areas. Mississippi does tax groceries at the full rate, which places a disproportionate burden on lower-income households. The state provides some relief through the income tax exemption on the first $10,000.

Property taxes in Mississippi are among the lowest in the nation, with an effective rate around 0.67%. The state offers a homestead exemption that provides significant property tax relief for owner-occupied homes. For homeowners age 65 and older with a household income below certain thresholds, the homestead exemption can eliminate the property tax entirely on the first $75,000 of assessed value.