On March 27, 2025, Mississippi Gov. Tate Reeves signed House Bill 1 (the "Build Up Mississippi Act"), reducing the income tax rate from 2027 through 2030 and further eliminating the state individual income tax after 2030 if certain fiscal requirements are met. The individual tax rates going forward for each calendar year are as follows:
- 2025: 4.4% of income in excess of $10,000
- 2026: 4% of income in excess of $10,000
- 2027: 3.75% of income in excess of $10,000
- 2028: 3.5% of income in excess of $10,000
- 2029: 3.25% of income in excess of $10,000
- 2030: 3% of income in excess of $10,000
- 2031 and thereafter: incremental reductions in tax rate if the state's Working Cash-Stabilization Reserve Fund is fully funded (until the rate is reduced to 0%).
Upon full phaseout, Mississippi would be one of only eight other states that do not impose an income tax on individuals.
The Build Up Mississippi Act also decreases the sales tax on groceries (retail sales of food or drink for human consumption) from 7% to 5%, effective July 1, 2025. Additionally, it incrementally increased the excise taxes on gasoline and special fuels taxes from the current rate of 18 cents per gallon to 27 cents per gallon between 2025 and 2027. The legislation also provides for the excise tax rates to be adjusted every other year beginning July 1, 2029, in accordance with the National Highway Construct Cost Index issued by the U.S. Federal Highway Administration.
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