Mississippi Gov. Tate Reeves signed into law what he and other lawmakers claim is the largest tax cut in state history on Tuesday. The law, which will gradually lower state income taxes over four years, is a win for Republican lawmakers who have been pushing for a cut in or the elimination of state income taxes throughout this legislative session and in past sessions.
“This is a tremendous victory, and it will make a massive impact on the lives of Mississippians, and it will make a tremendous impact on our economy for years and years to come,” said Reeves during the bill’s signing ceremony.
The new law will eliminate the 4% tax bracket by 2023 and gradually cut the 5% bracket to 4% by 2026. Additionally, single-income taxpayers will not pay taxes on the first $18,300 of income, and married filers will not pay taxes on the first $36,600 of income.
Proponents of the legislation hope the low-income taxes will draw more people to Mississippi and help revitalize the economy after what has been a difficult two years. Reeves and House Speaker Phillip Gunn have pushed for an elimination of the state income tax entirely.
Though the legislation means more money in the pockets of everyone who pays state income taxes, some who stand in opposition to the law are asking at what cost the cuts will come. In one of the poorest states that struggle to consistently provide adequate physical and mental healthcare and properly fund schools, other legislators have expressed concerns that this legislation could have serious negative implications for the state’s budget.
Individual income tax is Mississippi’s second largest source of tax revenue. In 2020, the individual income tax accounted for 32% of all tax revenue collected by the state, second only to sales tax which accounted for 38%.
The changes will go into effect next year.
