Mississippi is transitioning to a flat income tax structure. The 2026 rate is 4.0% (reduced from 4.7% in 2024 and 4.4% in 2025); the rate is scheduled to keep dropping under a fixed schedule set by 2025's HB 1: 3.75% in 2027, continuing to 3.0% by 2030, with further reductions possible from 2031 if fiscal conditions are met. Mississippi exempts Social Security and qualified retirement income (pensions, IRAs, 401(k)s and annuities) from state income tax; early distributions that do not meet plan requirements may be taxable. The state sales tax is 7%, with groceries taxed at 5% since July 1, 2025.
At a glance
Key Facts
State Income Tax
4.0% flat rate (2026); scheduled by HB 1 (2025): 3.75% (2027), 3.5% (2028), 3.25% (2029), 3.0% (2030); the first $10,000 of taxable income is taxed at 0%
Retirement Income
Exempt: Social Security, Railroad Retirement, and retirement income from federal, state and private retirement plans (pensions, IRA/401(k)/403(b), annuities, military retirement) once the plan's retirement requirements are met; early distributions may be taxable
Sales Tax
7% state rate; groceries taxed at 5% since July 1, 2025 (food bought with SNAP benefits is exempt); Jackson adds a 1% special sales tax (not applied to groceries or restaurant food); other local and special taxes apply in some areas
Property Tax
Relatively low effective rates; owner-occupied homes assessed at 10% of true value; homestead exemption credit of about $300/year
Estate Tax
No Mississippi estate tax; no inheritance tax
Cost of Living
Generally below the national average - housing, food, and services are typically cheaper than in most states
Introduction
Mississippi has been on an aggressive tax reform path since 2022, moving to a flat rate and phasing it down to 4.0% for 2026, with further scheduled reductions toward 3.0% by 2030. The state's exemption of Social Security and qualified retirement income from state income tax makes it particularly attractive for retirees.
Mississippi combines a flat income tax with a broad retirement income exemption and relatively low property taxes. The trade-off is a 7% state sales tax, one of the higher state rates in the US.
Section 01
Mississippi Income Tax Reform: Path to 3% Flat Rate by 2030
Mississippi passed landmark income tax reform (House Bill 531) in 2022, beginning a multi-year phase-down from 2022 through 2026. A second law, House Bill 1 signed March 2025), extends the phase-down on a fixed schedule to 3% by 2030, with further reductions from 2031 only if fiscal conditions are met:
Year
Top Flat Rate
Exempt Amount
2023
5% flat
$0–$10,000 exempt
2024
4.7% flat
$0–$10,000 exempt
2025
4.4% flat
$0–$10,000 exempt
2026
4.0% flat
$0–$10,000 exempt
2027 (scheduled, HB 1)
3.75% flat
$0–$10,000 exempt
2028–2030 (scheduled, HB 1)
3.5% (2028), 3.25% (2029), 3.0% (2030)
Fixed in HB 1
The first $10,000 of taxable income is taxed at 0% throughout the phase-down.
Mississippi Retirement Income Exemption: One of the Best in the US
Mississippi exempts the following from state income tax (once the retirement plan's requirements are met; early distributions may be taxable):
Social Security benefits (100% exempt)
All pension income — public employee, private employer, military
IRA distributions (traditional and Roth)
401(k) and 403(b) distributions
Annuity distributions
A retiree whose income consists entirely of Social Security and qualified retirement income generally pays no Mississippi income tax on it. Combined with relatively low property taxes, this makes Mississippi attractive for retirees on income-tax grounds.
Section 02
Mississippi Sales Tax: 7% Rate and Grocery Taxation
Mississippi's 7% state sales tax is among the higher state rates in the US. Since July 1, 2025 (HB 1), groceries (food and drink eligible to be purchased with SNAP benefits) are taxed at a reduced 5% state rate instead of 7%; food bought with SNAP benefits remains exempt.
Local Sales Taxes
Mississippi has few local sales taxes. The City of Jackson levies a 1% special sales tax (8% total on most taxable sales), which does not apply to groceries or restaurant food. Some other localities levy special or tourism-related taxes, so check the Mississippi Department of Revenue for the rate at your location.
Mississippi's 5% grocery rate is lower than before but still higher than in states that exempt groceries entirely, so food remains a more regressive burden for lower-income families than in those states.
Section 03
Mississippi Property Tax and Complete Tax Picture
Mississippi's effective property tax rates are relatively low. Mississippi assesses residential property at 10% of true value — so a $200,000 home has an assessed value of $20,000 before the homestead exemption, with local mill rates applied to the assessed value.
Mississippi Homestead Exemption
Mississippi provides a homestead exemption that gives a $300 credit against property taxes for owner-occupied primary residences. Additional exemptions are available for qualifying veterans, senior citizens, and disabled persons; check with your county tax assessor for details.
Mississippi's ongoing income tax reform, corporate tax phase-out, and retirement income exemptions create real planning opportunities. TaxHub connects you with licensed CPAs who understand Mississippi tax law.
⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.
Foreign income, overseas investments, or cross-border tax needs alongside your Mississippi residency? Greenback specialises in international and multi-jurisdiction tax situations.
⚠ Not the cheapest option — best for complex situations and expats who want a dedicated CPA.
Mississippi's income tax rate is 4.0% flat in 2026 (reduced from 4.7% in 2024 and 4.4% in 2025). The first $10,000 of income remains exempt. The rate is scheduled to keep reducing under a fixed schedule set by 2025's HB 1: 3.75% in 2027, continuing down to 3.0% by 2030, with further reductions from 2031 only if fiscal conditions are met.
Q
Does Mississippi tax pension and retirement income?
Mississippi completely exempts all retirement income from state income tax — this includes Social Security, pension income (public and private employers), IRA and 401(k) distributions, 403(b) distributions, annuity income, and military retirement pay, once the plan's retirement requirements are met; early distributions that do not meet those requirements may be taxable. Mississippi does not tax Social Security benefits at any income level.
Q
How does Mississippi compare to Florida and Texas for retirement taxes?
Mississippi, Florida, and Texas all impose no state income tax on retirement income (Florida and Texas have no personal income tax at all). Mississippi's sales tax (7% state rate; 5% on groceries) is higher than Florida's 6% and Texas's 6.25% state rates. Compare property taxes, sales taxes and cost of living for your own situation, since they can outweigh the income-tax comparison.
Q
Does Mississippi have an estate tax?
No — Mississippi has no state estate tax and no inheritance tax. Only the federal estate tax applies, with a 2026 exemption of $15 million per individual (OBBBA — raised from $13.99M and made permanent). Mississippi is estate-tax-free, similar to Florida, Texas, and most Southern states.
Q
What is Mississippi's sales tax rate on groceries?
Since July 1, 2025, Mississippi taxes groceries (food and drink eligible to be purchased with SNAP benefits) at a reduced 5% state sales tax rate, down from 7%, under HB 1. Food bought with SNAP benefits remains exempt. Mississippi's grocery rate is still higher than in states that exempt groceries entirely, so critics describe the tax as regressive.
Disclaimer:This guide provides general tax information for educational purposes only. Mississippi's income tax reform schedule is subject to revenue triggers and legislative changes. Always consult a qualified Mississippi tax professional for advice specific to your situation.