Lawmakers, Governor expect higher revenues, adopt $7.8 billion estimated revenue for Fiscal Year 2028

• The figure reflects a growth in revenue by about $266 million compared to the current fiscal year’s estimate.

A strong workforce, growing economy and inflation are contributing to a rise in tax revenue in Mississippi, leading the Joint Legislative Budget Committee, including Governor Tate Reeves (R), to adopt a nearly $7.8 billion estimated revenue for the coming fiscal year. 

That amount is $266.4 million more than the Legislature’s current fiscal year sine die estimate, state economist and chair of the Revenue Estimating Group Corey Miller told the committee. 

“I think that this revenue estimate is something that we should all be proud of because even as we have been literally cutting individual income taxes for our people for almost ten years now, overall tax revenues continue to grow,” Governor Reeves said after hearing the proposed revenue estimate.

An increase in predicted revenue comes as the state is working to lower the personal income tax rate on an annual basis and put a 2% reduction in the sales tax on grocerier in place. 

“However, through the first three months of this Fiscal Year 2027, sales tax revenues were 3.7 percent greater compared to the same period last fiscal year,” Miller told the committee.

The offset to the sales tax cuts appear to be due to several factors. Miller said moderately high inflation and continued modest wage growth in the state will likely lead to an increase in sales tax revenue in the current fiscal year, continuing into Fiscal Year 2028.

Since 2020, the state has seen wage growth at rates of at least 4.5% annually, whereas prior to 2020 that rate was between 2.5% and 3%.

Mississippi has also been phasing out the individual income tax. Reductions in that rate are being implemented gradually, with 2026’s rate coming in at 4% and the 2027’s rate expected to decline to 3.25%. 

Those reductions have led to a decline in income tax revenue by 3.7% for the first three months of this fiscal year when compared to the same period in the prior year.

“While individual income tax revenue should decrease as the income tax rate continues to decrease these revenues have fallen at a slower rate than projected by the Revenue Estimating Group,” Miller explained.

Wage growth and inflation also play a part in this category, Miller said, adding that there are more working Mississippians now being added to the economy, slowing the decline of income tax revenue. 

Corporations are benefitting from the current economic climate as well. Miller said corporate income tax revenue grew by 7.8% during Fiscal Year 2026, the first increase the state has seen since 2023.

So far in the first three months of Fiscal Year 2027, those revenues have increased by 26%. 

Nationally, the year-over-year change in after tax corporate profits increased by 17.5%, and thus far in the second quarter of the 2026 calendar year, the year-over-year increase was 26.6%. 

“This surge in corporate profits is reportedly due to several factors, including the buildout of infrastructure for artificial intelligence, higher oil prices that increase profits for energy companies, higher profits for firms in the financial sector due to the performance of the stock market, and cost reductions by large firms that have shielded their margins,” Miller described.

Double digit growth in those areas is expected to continue into 2028.

Use tax revenue is also on the rise. Miller told the lawmakers and Governor Reeves that the strong growth seen last fiscal year has continued into this fiscal year, adding that transfers were 13.1% higher during the first three months of this fiscal year, totaling $15 million. When compared to the current use tax estimates, those revenues increased by 17.9% as of September. 

Miller attributed those increases to the growth of online purchases.