Mississippi taxpayers are set to receive the largest tax cut in the history of the Magnolia State.
Thanks to the leadership of Governor Tate Reeves and House Speaker Philip Gunn, Mississippi is now moving to a flat income tax of 4%. This is a big step towards their goal of eliminating the state income tax completely.
“Mississippi lawmakers delivered a historic and game changing tax relief package that will provide a tax cut and a rate cut for all income taxpayers, and move Mississippi to a flat tax on the road to phasing out the state income tax completely,” said Grover Norquist, president of Americans for Tax Reform. “Governor Tate Reeves, House Speaker Philip Gunn, and many others worked together to create a brighter future for Mississippi.”
Right now, there are 8 states that do not impose income taxes of any kind. This list of “no income tax” states includes Mississippi’s neighbor Tennessee as well as nearby Texas and Florida. New Hampshire will be the 9th “no income tax state” as soon as it completes a phase out of its 5% tax on income earned from interest and dividends.
As people and jobs continue to move out of high tax states and into states that impose low- and no-income taxes, a growing movement of states are working to put their income taxes on the path to zero. This includes Mississippi’s neighbors Louisiana, which recently reduced its top income tax rate – the part of the income tax that is used to make decisions about investment – from 6% to 4.25%, and Arkansas, which is in the process of reducing its top income tax rate to 4.9%.
This movement also includes Iowa and North Carolina, which are moving to a flat income tax rates of 3.9% and 3.99%, as well as Georgia and Kentucky, which are currently working to deliver tax significant income tax relief.
Fortunately for Mississippians, Gov. Reeves and Speaker Gunn refuse to sit back and allow Mississippi to fall behind. Both are committed to phasing out the state income tax and worked tirelessly this legislative session to take a giant step in that direction.
Under the new Mississippi Tax Freedom Act, Mississippi will move to a flat income tax of 4% over the next four years. In addition to allowing taxpayers to keep more of their paychecks, the flat tax will protect all Mississippians from future tax increases. While graduated income taxes divide taxpayers into small groups, allowing politicians to rob them one by one, flat taxes require politicians to justify tax increases to every single income tax filer. It is harder for politicians to increase a single rate income tax.
Speaker Gunn was able to get an earlier version of this bill, which would have phased out the state income tax completely over the next 15 years, out of the House of Representatives with overwhelming bipartisan support. Unfortunately, the Senate was not able to find the support needed to send it to Gov. Reeves. But Mississippi taxpayers can rest assured knowing that both Speaker Gunn and Gov. Reeves are still committed to making Mississippi a “no income tax” state.
“Full elimination is the goal, it is still our goal. Taking this deal today does not forgo our goal of total elimination, but it is the largest tax cut in the history of our state,” said Speaker Gunn on Saturday. “It provides significant, real relief to our citizens.”
“The deal agreed to by the House and Senate is a $500M+ tax cut. That’s good. I still believe we can and should eliminate the income tax. The fiscal environment is right. Sadly, the political environment in the MS Senate is not,” tweeted Gov. Reeves. “This is a good step. It is a win at the beginning of this fight. It is not the end.”
The Mississippi Tax Freedom Act is a great step in the direction of phasing out the state income tax completely. Moving to a lower, flat rate will make Mississippi a much more attractive place to live, invest, do business, and raise a family. And most importantly, it will allow the hardworking people of Mississippi to keep more of their own money.