Mississippi State Income Tax Rates and Brackets for 2025

Key Takeaways

• Mississippi exempts first $10,000 of taxable income and taxes income above it at 4.4% in 2025.
• Income tax rate will decrease annually to eliminate individual income tax by 2040.
• Build-Up Mississippi Act lowers grocery sales tax and raises gasoline tax to offset revenue loss.

Mississippi has made important changes to its state income tax system for the 2025 tax year, affecting residents, newcomers, and anyone with taxable income in the state. These changes are part of a larger plan to phase out the individual income tax entirely by 2040. Understanding what has changed, who is affected, and what actions are needed is important for anyone living or planning to move to Mississippi. This update explains the new tax rates, the timeline for future changes, and what these shifts mean for individuals, families, and businesses.

Summary of What Changed

Starting with the 2025 tax year, Mississippi has reduced its state income tax rate for individuals. The most important updates are:

• The first $10,000 of taxable income is now exempt from state income tax.
• Any taxable income over $10,000 is taxed at a flat rate of 4.4%.
• This is a decrease from the 2024 rate, which was 4.7% on income above $10,000.
• The tax rate will continue to drop each year, with the goal of eliminating the individual income tax by 2040.

These changes are part of the Build-Up Mississippi Act, signed into law by Governor Tate Reeves on March 27, 2025. The law also includes other tax adjustments, such as lowering the sales tax on groceries and increasing gasoline taxes in the coming years.

Who Is Affected by the 2025 Mississippi State Income Tax Changes?

The new tax rates and brackets affect several groups:

• All Mississippi residents who earn taxable income
• New immigrants and newcomers to Mississippi who will be filing state taxes for the first time
• Workers and professionals moving to Mississippi for jobs or business opportunities
• Families and married couples who file jointly
• Employers who handle payroll and withholding for employees in Mississippi

If you live, work, or plan to move to Mississippi in 2025, these changes will impact how much state income tax you owe and how you file your taxes.

Effective Dates and Timeline for Future Changes

The new tax rates take effect for the 2025 tax year, which means they apply to income earned from January 1, 2025, through December 31, 2025. The law also sets out a clear schedule for future reductions:

• 2025: 4.4% tax rate on income over $10,000
• 2026: 4.0%
• 2027: 3.75%
• 2028: 3.5%
• 2029: 3.25%
• 2030 and beyond: 3.0%, with further reductions planned until the tax is eliminated by 2040

The first $10,000 exemption remains in place throughout this period. This means that as the years go by, the amount of tax you pay on income above $10,000 will keep decreasing.

Detailed Breakdown of 2025 Mississippi State Income Tax Rates and Brackets

For the 2025 tax year, the Mississippi state income tax system is simple:

Example:
If you earn $15,000 in taxable income in 2025, you pay no state income tax on the first $10,000. You pay 4.4% on the remaining $5,000, which equals $220.

Key Points:
– No state income tax is owed on the first $10,000 of taxable income.
– A flat 4.4% tax applies only to income above $10,000.
– This applies to all individual taxpayers, including immigrants, workers, and families.
– Married couples filing jointly can calculate tax separately for each spouse and then combine the results.

Required Actions for Taxpayers

If you are a taxpayer in Mississippi, here’s what you need to do for the 2025 tax year:

1. Review your taxable income:
   Check if your income is above $10,000. If it is, only the amount over $10,000 is taxed at 4.4%.

2. Adjust your withholding:
   If you are an employee, your employer should update your state tax withholding to match the new rates. If you are self-employed or have other income, you may need to adjust your estimated tax payments.

3. Use the correct tax forms:
   When filing your 2025 Mississippi state income tax return, make sure to use the updated forms reflecting the new rates and brackets. The official forms and instructions are available on the Mississippi Department of Revenue website.

4. Monitor for updates:
   The Mississippi Department of Revenue may issue new guidance or procedures as the tax law changes. Stay informed by checking their official announcements.

5. Consider the impact on your finances:
   With the first $10,000 exempt and a lower rate on the rest, most taxpayers will see a reduction in their state income tax bill for 2025.

Implications for Pending Applications and Newcomers

If you are new to Mississippi or planning to move there, these tax changes may affect your decision and your financial planning:

• Immigrants and newcomers: If you are moving to Mississippi for work, study, or family reasons, you will benefit from the lower state income tax rates. The first $10,000 of your taxable income will not be taxed, and the rate on the rest is lower than in previous years.
• Pending tax applications: If you have already filed or are in the process of filing for the 2025 tax year, make sure your calculations use the new rates. If you filed early using the old rates, you may need to file an amended return.
• Employers and payroll departments: Make sure payroll systems are updated to reflect the new rates so that employee withholding is accurate.

Background: The Build-Up Mississippi Act and Its Goals

The Build-Up Mississippi Act is the law behind these tax changes. Signed by Governor Tate Reeves on March 27, 2025, the Act aims to:

• Gradually eliminate the individual income tax in Mississippi by 2040
• Reduce the tax rate each year, making the state more attractive to workers and businesses
• Offset some lost revenue by increasing gasoline taxes and lowering the sales tax on groceries

The Act keeps the first $10,000 of taxable income exempt from state income tax throughout the phase-out period. This approach is designed to help low- and middle-income earners the most.

Other Tax Changes in the Law

Besides the income tax changes, the Build-Up Mississippi Act includes:

• Lowering the sales tax on groceries from 7% to 5%, effective July 1, 2025. This helps all residents, especially families, by making food more affordable.
• Increasing gasoline taxes through 2027. This is meant to help the state maintain its roads and infrastructure as income tax revenue declines.

These changes are part of a larger plan to shift how the state collects revenue, focusing less on income and more on other sources.

Expert and Stakeholder Perspectives

State leaders, tax experts, and analysts have different views on these changes:

• Governor Tate Reeves and state legislators say the tax phase-out will help Mississippi grow by attracting new residents and businesses. They believe lower taxes will make the state more competitive.
• Tax experts point out that the gradual reduction gives people time to adjust and provides relief to taxpayers. However, they also note that the state must find ways to replace lost income tax revenue, especially as gasoline taxes only cover part of the gap.
• Fiscal analysts warn that cutting income taxes could make it harder for the state to fund schools, healthcare, and other public services in the long run. They suggest watching how the changes affect the state budget over time.

Standard Deductions and Filing Details for 2025

For the 2025 tax year, the standard deductions in Mississippi remain:

• $2,300 for single filers
• $4,600 for married couples filing jointly

These deductions are subtracted from your income before calculating your taxable income. For example, if you are single and earn $12,000, you subtract the $2,300 deduction, leaving $9,700 in taxable income. Since this is below $10,000, you owe no state income tax.

If you are married and file jointly, you subtract $4,600 from your combined income before applying the tax rates.

Practical Examples

To help you see how the new rules work, here are a few examples:

Example 1: Single Filer with $9,000 Taxable Income
– Standard deduction: $2,300
– Taxable income after deduction: $6,700
– State income tax owed: $0 (since it’s under $10,000)

Example 2: Single Filer with $15,000 Taxable Income
– Standard deduction: $2,300
– Taxable income after deduction: $12,700
– First $10,000: taxed at 0%
– Remaining $2,700: taxed at 4.4% = $118.80

Example 3: Married Couple Filing Jointly with $30,000 Combined Income
– Standard deduction: $4,600
– Taxable income after deduction: $25,400
– Each spouse can calculate separately if desired, but combined, the first $10,000 is exempt, and $15,400 is taxed at 4.4% = $677.60

These examples show how the new rates and deductions can lower your tax bill.

Why These Changes Matter for Immigrants and New Residents

For immigrants and newcomers, Mississippi’s tax changes can make the state a more attractive place to live and work. Lower income taxes mean you keep more of your earnings. The exemption for the first $10,000 is especially helpful for those starting new jobs or working part-time.

If you are moving to Mississippi for the first time, you should:

• Check your expected income and how the new rates apply
• Ask your employer or tax advisor about the correct withholding
• Use the official Mississippi Department of Revenue resources for up-to-date forms and instructions

As reported by VisaVerge.com, these tax changes are part of a broader trend among some states to lower or eliminate income taxes to attract new residents and businesses. However, it’s important to consider the full picture, including other taxes and the state’s ability to fund public services.

What to Watch for in the Future

Mississippi’s plan to phase out the individual income tax is ambitious. Here’s what to keep in mind as the changes continue:

• Annual rate reductions: Each year, the tax rate on income over $10,000 will drop, so your tax bill should get smaller over time.
• Possible changes to deductions or credits: The state may adjust other parts of the tax code as the phase-out continues.
• Impact on public services: Watch for news about how the state funds schools, healthcare, and infrastructure as income tax revenue declines.
• Updates from the Department of Revenue: Always use the latest forms and instructions from the Mississippi Department of Revenue to make sure you are following the current rules.

Actionable Takeaways and Next Steps

If you live in Mississippi or plan to move there, here’s what you should do now:

• Review your income and deductions to see how the new rates affect you.
• Update your withholding or estimated payments to avoid surprises at tax time.
• Use the official Mississippi Department of Revenue website for forms, instructions, and updates.
• Plan for future changes as the tax rate continues to drop each year.
• Consult a tax professional if you have questions about your specific situation, especially if you are new to the state or have complex income sources.

By staying informed and taking these steps, you can make the most of the new Mississippi state income tax rules for 2025 and beyond. The changes are designed to lower the tax burden for most residents, but it’s important to keep an eye on how the state balances these cuts with other taxes and public services.

For more details and official updates, visit the Mississippi Department of Revenue. This is the best source for current forms, instructions, and news about state tax changes.

Mississippi’s move to phase out the state income tax is a major shift that will affect everyone living or working in the state. Whether you are a long-time resident, a newcomer, or an employer, understanding these changes will help you plan your finances and avoid surprises. As the tax rate continues to drop in the coming years, Mississippi may become an even more attractive place to live and work, but it’s wise to stay informed and prepared for any future adjustments.

Learn Today

Taxable Income → Amount of income subject to state income tax after deductions and exemptions are applied.
Flat Tax Rate → A single constant tax rate applied to taxable income regardless of amount within relevant brackets.
Build-Up Mississippi Act → 2025 law that reduces individual income taxes while adjusting sales and gasoline taxes for revenue.
Withholding → Process where employers deduct estimated tax payments from employees’ paychecks to cover tax liabilities.
Standard Deduction → Fixed deduction subtracted from gross income to determine taxable income for filing taxes.

This Article in a Nutshell

Mississippi’s 2025 tax changes exempt the first $10,000 of income and lower rates, aiming to phase out income tax by 2040, benefiting residents and newcomers with simpler, lower taxes while adjusting other state taxes for revenue balance.
— By VisaVerge.com