Slower state revenue growth expected in Mississippi

• State Economist tells lawmakers the state is experiencing slower revenue growth than in recent years but the labor force participation rate is up.

The Joint Legislative Budget Committee met Thursday in Jackson as lawmakers begin the process of planning Mississippi’s next state budget.

The Magnolia State’s year-to-date revenue collections for the first three months of FY 2025 were $46 million above estimates, yet when factoring in the October decline in collections, Mississippi’s revenues remain above estimates by $18.5 million on the year.

State Economist Corey Miller told the 14-member budget committee that the state is experiencing slower revenue growth than in recent years. Comparing the first four months of the current fiscal year to the same period in the prior year, sales tax collections are flat and individual income tax revenues are up.

“Despite a reduction in the income tax rate in January of this year, individual income tax revenues are up 1.6 percent through the first four month of this fiscal year compared to the same period last year,” Miller said. “They were up 4 percent above the current estimate as of October or a little over $30 million.”

Mississippi is currently in a phase-down of the income tax to a flat 4 percent, due to the 2022 tax cut that is set to be fully implemented by 2026.

Miller attributed that increase to an 0.8 percent increase in the state’s labor force participation rate as of April. He also noted that residential employment is up 1.7 percent in the last six months.

“We have also heard anecdotal reports of increased businesses started in the state in the last six months, and both of those could be consistent with an increase in individual income tax revenues,” Miller said.

Corporate income taxes are trending lower so far this year, Miller said, yet insurance premium tax revenues are growing.

Given those factors, and others, Miller said the Revenue Estimating Group is recommending a FY 2026 budget estimate of $7.627 billion, an increase of 0.4 percent or $26.9 million over the FY 2025 sine die estimate.

Speaker Jason White (R) led the committee in adopting the $7.627 billion revenue estimate for the coming fiscal year. The estimate will be used as lawmakers begin the process of crafting the next state budget beginning in January.

Present at the meeting was also Governor Tate Reeves (R) who thanked the committee for their work. He said the state’s economy was seeing significant capital investments, to the tune of nearly $14 billion this year alone.

Reeves, who concurred with the estimate, did encourage lawmakers to return the additional projected dollars in the coming fiscal year to the taxpayers.

The JLBC will meet again on December 11 to publicly adopt and release the FY 2026 budget recommendation.

You can watch the full JLBC meeting below.