Mississippi is transitioning to a flat income tax structure. The 2026 rate is 4.3% (reduced from 4.7% in 2024 and 4.4% in 2025); the rate is scheduled to drop to 4.0% flat by 2028. Mississippi completely exempts all retirement income — pension, IRA, 401(k), Social Security, and annuities — from state income tax. This makes Mississippi one of the top retirement-friendly states for income tax. Property taxes average 0.65%, and the state has a 7% state sales tax. Mississippi is one of the lowest cost-of-living states in the US.
At a glance
Key Facts
State Income Tax
4.3% flat rate (2026-2027); further reduction to 4.0% (2028+); income below $10,000 exempt during transition
Retirement Income
100% exempt: Social Security, pension (public and private), IRA/401(k)/403(b), annuities, military retirement — ALL fully exempt from Mississippi income tax
Sales Tax
7% state rate — tied for 3rd highest in the US; localities add up to 1%; combined rates up to 8% in some cities; groceries taxed at 7%
Property Tax
0.65% average effective rate — low; assessed at 10% of appraised value for owner-occupied; homestead exemption $300/year credit
Estate Tax
No Mississippi estate tax; no inheritance tax
Cost of Living
Lowest in the US — housing, food, and services significantly cheaper than national average
Introduction
Mississippi has been on an aggressive tax reform path since 2022, eliminating its lowest income tax bracket (previously taxed at 4%) and beginning a phase-down toward a 4% flat rate by 2030. The state's complete exemption of all retirement income from state income tax makes it particularly attractive for retirees.
Mississippi's cost of living is the lowest in the United States — combined with low income and property taxes, Mississippi offers one of the lowest total tax burdens of any state. The trade-off is a 7% state sales tax (tied for 3rd highest nationally) and significant infrastructure challenges in many parts of the state.
Section 01
Mississippi Income Tax Reform: Path to 4% Flat Rate by 2030
Mississippi passed landmark income tax reform (House Bill 531) in 2022, beginning a multi-year phase-down to a single flat rate of 4% by 2028–2030:
Year
Top Flat Rate
Exempt Amount
2022
5% (3 brackets)
$0–$5,000 exempt
2023
4.7% flat
$0–$10,000 exempt
2024
4.7% flat
$0–$10,000 exempt
2025
4.4% flat
TBD
2026–2027
4.3% flat
TBD
2028+
4.0% flat
Full exemption phase-out
The first $10,000 of income remains exempt during the transition, with the exemption potentially phasing out as the rate reduces. Mississippi's corporate income tax is also being phased out — a significant business incentive.
Mississippi Retirement Income Exemption: One of the Best in the US
Mississippi completely exempts from state income tax all of the following:
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
Disability income
This comprehensive retirement exemption means a Mississippi retiree with $150,000 in pension, IRA, and Social Security income pays zero Mississippi income tax. Combined with the state's low cost of living and low property taxes, Mississippi is increasingly recognized as one of the top retirement destinations for income tax purposes — though infrastructure and healthcare quality gaps are acknowledged disadvantages.
Section 02
Mississippi Sales Tax: 7% Rate and Grocery Taxation
Mississippi's 7% state sales tax is among the highest single-state rates in the US. Unlike most high-sales-tax states, Mississippi taxes groceries at the full 7% rate — one of a diminishing number of states to do so.
Sales Tax by City
City
State Rate
Local Rate
Total Rate
Jackson
7%
1%
8%
Gulfport
7%
0%
7%
Southaven
7%
0%
7%
Hattiesburg
7%
0%
7%
Biloxi
7%
0%
7%
Mississippi taxes food at the full 7% rate, making it one of the most regressive sales tax structures in the US — lower-income families spend a higher proportion of income on food, making this policy disproportionately burdensome. Legislative efforts to reduce the grocery tax rate have been proposed but not enacted as of early 2026.
Section 03
Mississippi Property Tax and Complete Tax Picture
Mississippi's average effective property tax rate of approximately 0.65% is below the national average. 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.
Property Tax by County
County
Effective Rate
Annual Tax on $200K Home
Hinds County (Jackson)
~0.83%
~$1,660
Harrison County (Gulfport/Biloxi)
~0.63%
~$1,260
DeSoto County (Southaven)
~0.70%
~$1,400
Rankin County (Brandon)
~0.69%
~$1,380
Madison County (Ridgeland)
~0.55%
~$1,100
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 veterans (100% disabled = $7,500 assessed value reduction), senior citizens, and disabled persons. The relatively modest $300 credit (vs Texas's $100,000 exemption) reflects Mississippi's already-low property tax rates.
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 4.3% flat in 2026 (reduced from 4.7% in 2024 and 4.4% in 2025). The first $10,000 of income remains exempt during the transition period. The rate is scheduled to reduce to 4.0% by 2028 — completing Mississippi's multi-year path to a flat 4% structure. Mississippi also has plans to phase out its corporate income tax, making it increasingly competitive for business formation.
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, disability income, and military retirement pay. There is no income or age limit on this exemption. Mississippi is consistently ranked among the best states for retirement income tax treatment.
Q
How does Mississippi compare to Florida and Texas for retirement taxes?
Mississippi, Florida, and Texas all have zero state income tax on retirement income. Florida and Texas have no income tax at all (so no income tax on any income, not just retirement). Mississippi's advantage is lower property taxes than Florida (0.65% vs 0.86%) and much lower property taxes than Texas (0.65% vs 1.60%). Mississippi's sales tax (7%) is higher than Florida's average but similar to some Texas localities. Mississippi's cost of living (lowest in the US) is the primary differentiator — a dollar goes further in Mississippi than in Florida or Texas.
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 2024 exemption of $13.61 million per individual. Mississippi is estate-tax-free, similar to Florida, Texas, and most Southern states.
Q
What is Mississippi's sales tax rate on groceries?
Mississippi taxes groceries at the full 7% state sales tax rate — one of the few remaining states to do so. This makes Mississippi's grocery tax one of the highest in the US and has been criticized as regressive (disproportionately burdening lower-income families who spend more of their income on food). Legislative proposals to reduce the grocery tax rate have been introduced but not enacted as of early 2026.
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.