The Mississippi House of Representatives has dropped a major tax exemption bill. Authored by Speaker Philip Gunn and co-authored by Representatives Jason White and Trey Lamar, the bill would create the Mississippi Tax Freedom Act of 2021, HB 1439.
The legislation’s intent is to increase the amount of personal exemptions under state income tax, in other words, phase out the state income tax over a 10 year period. This will apply for single individuals, married couples and heads of household.
Individuals making under $50,000 a year and married couples making less than $100,000 a year will be exempt immediately from income taxes on those monies if this bill passes. This would apply for filings in 2022.
The bill was taken up in the House Ways and Means committee late Monday afternoon. Live stream was not available for that meeting, but it was reported by members that the bill passed unanimously. Chairman of the committee, Rep. Lamar, indicated that the bill could come to the floor as soon as Tuesday for a vote by members.
“Within five years the goal is that an individual making $100,000 is paying no income tax,” said Rep. Trey Lamar.
The bill would also cut the tax on groceries, effective July 2021, from 7% to 4%
In order to offset the loss in state revenue that will occur, the general sales tax rate will increase from 7% to 9.5%. This number is on par with other states, like Tennessee, who also do not have a state income tax. The bill will also increase the sales tax rate on property purchases, farm equipment, alcohol, cigarettes and auto sales to name a few. However, no new taxes will be added.
The Department of Revenue will be tasked with monitoring the state’s general fund and as long as growth continues, Rep. Trey Lamar said, the income tax will be eliminated.
Those dollars collected as a result of the sales tax rise will be deposited into a special fund created within the Mississippi Treasury, known as the “Budget Stabilization Fund.” This will allow DOR to monitor that growth is still occurring for the state.