The Senate’s plan must be moved off the floor by the Wednesday deadline.
The Mississippi Senate has dropped its income tax cut plan just two days before the deadline for floor action on revenue bills in the originating chamber.
RELATED: Mississippi Senate to drop tax reduction plan to eliminate 4% income tax bracket
The legislation was announced at the beginning of February by State Senator Josh Harkins (R) in a Finance Committee meeting. Harkins is the principal author on the legislation.
Today in Finance, the legislation was brought up and passed in order to move quickly to the Senate floor before Wednesday’s deadline.
Harkins offered an amendment in committee that would clarify language to cap the tax rebate offered in the plan at $1,000 per tax return, or family, and no less than $100 per taxpayer. The amendment was passed in committee.
SB 3164 would effectively cut taxes, but not eliminate them over a four-year period. Here are the highlights of what the bill will do:
- Cuts the sales tax on groceries from 7% to 5%
- Phases out the 4% income tax bracket over four years.
- Cuts the state’s portion of car tag revenue.
- Provides a rebate of up to $1,000 for citizens with tax liability.
According to Harkins, the Senate plan will not raise any taxes or create holes in the state budget due to the lost revenue from not collecting taxes on the associated income tax bracket. The total loss of reoccurring revenue to the state would be $316 million.
Harkins said he will offer an additional amendment on the floor to ensure that cities are kept whole after the cut of the sales tax on groceries.
Mississippi operates on a graduated income tax rate. The current rate is 0% on the first $2,000 of income, 3% on the next $3,000, 4% on the next $5,000 and 5% on all taxable income over $10,000.
Mississippi will finish phasing out the 3% bracket in 2022 after the passage of a bill in 2016 that rolled out a four-year phase out of the bracket from 2018 to 2022.
If the current Senate plan is passed the 5% income tax bracket will still remain.
The House and Senate have now proposed their own proposals for eliminating all or part of Mississippi’s income tax laws.
RELATED: Mississippi House set to pass its version of Income Tax Elimination
