Tax in Mississippi: a complete guide
From income tax to sales to retirement income, there’s plenty to get your head around regarding Mississippi’s state tax system. This overview will help you understand how Mississippi’s taxes could affect you.
Mississippi income tax
41 of the 50 United States have their own state income tax rates. This means residents of those states have to pay income tax federally and again to their state, with state income tax going toward funding local services.
Mississippi is one of the US states to impose a state income tax on its residents. There are just four income tax brackets for Mississippians, and the threshold for the top income tax rate is so low that most residents will find themselves paying the top rate of five percent state income tax.
All filers (single, married filing jointly, married filing separately, head of household):
|Taxable income||State tax amount|
|$0 - $3,000||0 percent|
|$3,000 - $5,000||3 percent|
|$5,000 - $10,000||4 percent|
|Over $10,000||5 percent|
What deductions can you get on Mississippi’s state taxes?
The standard deduction in Mississippi is $2,300 for single filers and married individuals filing separately, $4,600 for married couples filing jointly and $3,400 for heads of household.
Along with those deductions, there is also a personal exemption in Mississippi. The exemption is $5,000 for single filers and $10,000 for joint filers. There are additional exemptions for any dependents you have.
Mississippi sales tax
Mississippi also applies a blanket sales tax. Sales taxes set at the state level are seven percent on goods and services. However, cities and counties can add their own local sales taxes.
For example, in Mississippi’s capital city, Jackson, there is an additional sales tax of one percent – meaning the total sales tax in the state capital is eight percent.
Mississippi also allows cities and counties to levy tourism and economic development taxes on hotels, motels, restaurants, and bars.
Mississippi is one of just two states that applies sales tax to all food products – including groceries. Restaurant taxes can also apply in some areas, making eating out extra expensive.
Some exceptions, such as prescription drugs, are exempt from all state sales taxes.
Further to those exceptions, Mississippi has two dedicated sales tax holidays. The first normally occurs over the last weekend of July, when clothing items up to $100 can be purchased without sales tax.
The other sales tax holiday takes place over the first weekend of September and is called the Mississippi Second Amendment Weekend. Firearms, ammunition and hunting supplies are free of state sales tax.
Alcohol is not tax-exempt, and Mississippi has excise duties applying to different types of alcohol. For instance:
The Mississippi beer tax is $0.43 per gallon
The Mississippi liquor tax is $2.50 per gallon
The Mississippi wine tax is $0.35 per gallon, and this goes up to $1 for sparkling wines
Mississippi property tax
With the state’s relatively high sales taxes, below-average property taxes in Mississippi can go some way in easing the cost of living for Mississippians.
Mississippi's average property tax rate is just 0.75 percent – one of the lowest in the country and below the nationwide average of 0.99 percent.
Average property values vary across Mississippi’s 82 counties, but the state’s average annual property tax fee is just $1,097.
Mississippi motor tax
The sales of motor vehicles in Mississippi are taxed at a rate of five percent. In addition to buying their vehicle, motorists must also factor in the state’s gas tax.
Mississippi offers some of the lowest fuel taxes in the country, with regular gasoline and diesel taxed at just 18 cents per gallon.
Mississippi estate tax
Mississippi is one of the 38 states that does not have an estate tax. The federal estate tax can still apply if your estate is above a certain threshold ($12.92 million in 2023); otherwise, there will be no fees on the estate or inheritance you leave behind.
However, if you live in another state but inherit an estate from someone in Mississippi, you’ll need to check your local regulations, as you might be liable to pay fees on the inheritance in your state.
Mississippi retirement tax
Good news for seniors: Mississippi is ranked as one of the states with the lowest tax burdens for retirees.
All retirement income is exempt from state income taxes in Mississippi, meaning seniors in the Magnolia State stand to make a significant savings compared to those in other states.
Income from retirement savings, including 401(k)s, IRAs, and Social Security, is all exempt from Mississippi’s income taxes.
For further tax guidance and to ensure you’re not paying more tax than you need to, it’s wise to speak to an expert. A financial advisor can help you handle all your tax queries and ensure you’re not paying more tax than needed.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.