Mississippi Tax Calculator 2026

Mississippi Income Tax: On the Path to Zero

Mississippi has a flat income tax rate of 4.7% in 2026, with the first $10,000 of taxable income completely exempt. This is a significant change from the state's historical graduated rate structure, which previously had rates of 3%, 4%, and 5% across different brackets. Under House Bill 531, signed by Governor Tate Reeves in 2022, Mississippi committed to a phased elimination of its income tax.

The reform eliminated the previous 3% and 4% brackets entirely and began reducing the top rate from 5%. The plan targets annual reductions contingent on revenue growth triggers, with a goal of reaching 0%. If fully implemented, Mississippi would become the largest Southern state to eliminate income tax entirely, joining the ranks of Texas, Florida, Tennessee, and Wyoming.

Mississippi uses a standard deduction of $2,300 for single filers and $4,600 for married filing jointly, plus a personal exemption of $6,000 (single) or $12,000 (married). Combined with the $10,000 income exemption, a single filer effectively pays no state income tax on the first $18,300 of income. The state generally conforms to federal tax law for income definitions but maintains its own deduction and exemption schedule.

Mississippi Sales Tax: Highest State Rate

Mississippi levies a 7% state sales tax, tied with Indiana and Tennessee for the highest state-level sales tax rate in the nation. Local jurisdictions can add a small amount, bringing the average combined rate to approximately 7.07%. However, because local additions are minimal, Mississippi has one of the more uniform sales tax systems in the country.

One of the most notable aspects of Mississippi's sales tax is that it taxes groceries at the full 7% rate. Mississippi is one of only a handful of states that fully taxes grocery purchases with no exemption or reduced rate. Legislative efforts to exempt groceries have been debated repeatedly but have not yet succeeded, partly because the revenue loss would be substantial — estimated at over $300 million annually.

Mississippi uses a "retail sales tax" model that taxes most tangible goods and some services. Prescription drugs are exempt, as are sales to governmental entities. Manufacturing machinery and raw materials used in production are exempt. The state requires marketplace facilitators (like Amazon and eBay) to collect and remit sales tax on behalf of third-party sellers for sales exceeding $250,000 annually.

Mississippi Property Tax

Mississippi's effective property tax rate is approximately 0.65%, one of the lowest in the nation and well below the 1.1% national average. The low effective rate is partly due to Mississippi's assessment system, which assesses owner-occupied homes at only 10% of true market value (compared to 15% for other property classes). This means a home with a true value of $200,000 is assessed at just $20,000 for tax purposes.

Mississippi provides a homestead exemption of up to $7,500 of assessed value for owner-occupied homes, which translates to about $300 in annual tax savings. Seniors aged 65 and older receive an additional exemption, and disabled veterans may qualify for total property tax exemption. The combination of low assessment ratios, exemptions, and moderate millage rates makes Mississippi one of the most affordable states for property ownership.

Mississippi's Retirement Tax Advantages

Mississippi is considered one of the most tax-friendly states for retirees in the country. The state provides broad exemptions on retirement income:

• Social Security benefits are completely exempt from Mississippi income tax
• Qualified retirement plan distributions (401(k), 403(b), 457) are fully exempt
• IRA distributions are fully exempt
• Government and military pensions are fully exempt
• Private pensions from qualified employer plans are fully exempt

This comprehensive exemption of retirement income, combined with low property taxes and a low cost of living, makes Mississippi a compelling destination for retirees. The median home price in Mississippi is among the lowest in the nation, and the cost of living is approximately 15-20% below the national average according to the Bureau of Economic Analysis regional price parities data.

Mississippi's Economic Landscape and Tax Revenue

Mississippi relies heavily on its sales tax, which generates roughly 35% of state general fund revenue. The income tax contributes about 30%, though this share is declining with the phased elimination. Mississippi's economy is anchored by manufacturing (especially automotive, with Nissan and Toyota plants), agriculture (the nation's largest catfish producer and a top cotton state), military installations (Keesler AFB, Camp Shelby, Stennis Space Center), and a growing healthcare sector.

The state's decision to phase out the income tax reflects a broader trend among Southern states competing for business investment and population growth. Mississippi's leadership has pointed to Texas and Florida as models of economic growth without income tax. Critics note that the heavy reliance on sales tax (which taxes groceries) is regressive, disproportionately affecting lower-income residents. The state's challenge is balancing competitive tax policy with maintaining services for its population.

Mississippi vs. Neighboring States

• Alabama — Alabama has a graduated income tax up to 5%, with the federal income tax deduction. Sales tax averages 9.27% (much higher than Mississippi). Property tax is just 0.39%, even lower than Mississippi. Alabama is also very retirement-friendly. Mississippi's declining income tax rate will soon undercut Alabama's.
• Tennessee — Tennessee has no income tax at all (the Hall Tax on investment income was fully phased out in 2021). Sales tax averages 9.55%, the highest combined rate nationally. Property tax is 0.64%, similar to Mississippi. For pure tax burden, Tennessee currently wins on income tax, but Mississippi is converging toward zero.
• Louisiana — Louisiana has a flat 4.25% income tax. Combined sales tax averages 9.55% (among the highest nationally). Property tax is 0.51%. Louisiana has complex local tax systems. Mississippi's simpler system and lower combined rates are competitive.
• Arkansas — Arkansas has graduated income tax up to 3.9% (recently reduced). Sales tax averages 9.47%. Property tax is 0.62%. Arkansas has also been cutting income taxes aggressively. Both states are racing toward lower tax burdens to attract residents and businesses.