- With full elimination of the state income tax facing an uphill battle, Mississippians will continue to pay state and federal income taxes for the foreseeable future unless lawmakers act.
Tax season is here once again, meaning it’s time to ensure you and your employer paid the state and federal government their share on your productivity during the 2023 calendar year.
The Internal Revenue Service (IRS) expects more than 146 million individual federal tax returns to be filed by Tax Day, April 15, 2024. If you are a resident of Mississippi, your state income tax filing is also due that day. Close to a million filings will occur in the Magnolia State.
Those seeking an extension at either level should also file that paperwork by April 15th as well.
Tips from the IRS
The IRS recently offered six tips to help taxpayers as they prepare to file their 2023 tax returns during filing season. They included:
1. Gather all necessary tax paperwork and records for accuracy to avoid missing a deduction or credit.
2. Remember to report all types of income on the tax return.
3. Filing electronically with direct deposit is the fastest way to receive a refund.
4. Free resources are available to help eligible taxpayers file online. Free help may also be available to qualified taxpayers.
5. Consider which filing option to use; each one has its own benefits.
6. Don’t wait on hold when calling the IRS.
In addition, the IRS urged filers to carefully choose a tax professional, if they choose to use one, to ensure that their personal and financial information is safe and secure and treated with care. Most tax return preparers provide honest, high-quality service, the IRS note, but some may cause harm through fraud, identity theft and other scams.
Income Tax in Mississippi
As for filing state income taxes in Mississippi, the Department of Revenue notes the changes to the income tax structure following the tax cut of 2022 which eliminated the 4% bracket and phased down the 5% bracket to 4%. The measure was passed by the Legislature and signed into law by Governor Tate Reeves (R).
The graduated 2023 income tax rate is:
- 0% on the first $10,000 of taxable income.
- 5% on the remaining taxable income in excess of $10,000.
Mississippi tax rates for years 2024-2026 will be reduced based on the 2022 tax cut law, with the rates for tax year 2024 and forward listed below:
| Tax Year 2024 | Excess of $10,000 of Taxable Income is taxed @ 4.7% |
| Tax Year 2025 | Excess of $10,000 of Taxable Income is taxed @ 4.4% |
| Tax Year 2026 | Excess of $10,000 of Taxable Income is taxed @ 4% |
Governor Reeves has proposed a phase out plan for the remainder of the state income tax that would see it fully eliminated by 2029. It was his top priority in he recently release Executive Budget Recommendation for fiscal year 2025.
READ MORE: Eliminating income tax top priority for Governor Reeves in FY 25 budget recommendations
Reeves said each fiscal year beginning in FY25, Mississippi should take the total amount of revenue above estimates and put half of it towards eliminating the income tax. Reeves proposed the following structure to accomplish the phase out:
- Immediately reduce the income tax to 3%.
- Phase out each calendar year as follows:
- Calendar Year 2026: 3%
- Calendar Year 2027: 2%
- Calendar Year 2028: 1%
- Calendar Year 2029: 0%
“Eliminating the income tax does not require cutting expenditures or raising taxes in other areas,” Reeves states. “Rather, it requires that our government lives within its means and those in power recommit to the economic principles that helped build the greatest country in history.”
However, movement by lawmakers to take up that plan or offer a credible proposal of their own appears unlikely during the 2024 session as increasing welfare assistance through Medicaid expansion and addressing the solvency of the state retirement system appear to be top of mind of state Senate and House leaders.
Lawmakers have been hesitant to enact further income tax cuts given the uncertainty of the U.S. national economy and its impact on the state’s revenues. Year-to-date, individual income tax collections are down $123 million over the prior year since the tax cuts were implemented. But Mississippi has thus far remained in a solid budgetary position even with the individual income tax reduction as total revenue collections for seven months into the fiscal year have exceeded estimates by over $98 million.
READ MORE: State revenues come in below estimate for January but remain $98M above expectations for the year
Income tax filers who need state or federal assistance can visit www.dor.ms.gov and/or www.irs.gov.
