Taxes in Mississippi: Income, Sales, and Property

Mississippi’s state government is funded by a diverse combination of taxes on income, sales, and property. These revenue sources support public services throughout the state, each with its own set of rules, rates, and regulations that affect individuals and businesses.

Mississippi Income Tax

For the 2025 tax year, Mississippi has a simplified personal income tax structure. The first $10,000 of a taxpayer’s taxable income is not taxed, and any income exceeding that amount is taxed at a flat rate of 4.4%. This rate is scheduled to decrease to 4.0% in 2026.

To reduce their taxable income, taxpayers can claim a standard deduction. For single individuals and those married filing separately, the standard deduction is $2,300. Heads of household can claim a $3,400 deduction, while married couples filing jointly are entitled to a $4,600 deduction.

In addition to the standard deduction, Mississippi offers personal exemptions that further reduce taxable income. Single filers can claim a $6,000 exemption, and married couples filing jointly can claim a $12,000 exemption. An additional exemption of $1,500 is available for each dependent claimed. The state also provides tax credits for childcare and adoption expenses.

Corporations operating in Mississippi are also subject to an income tax on their net earnings. The corporate tax structure is graduated, with the first $5,000 of taxable income being exempt. Income between $5,001 and $10,000 is taxed at a 4% rate, and all taxable income over $10,000 is taxed at 5%. Businesses with an anticipated annual tax liability exceeding $200 are required to make quarterly estimated tax payments.

Mississippi Sales and Use Tax

Mississippi imposes a statewide sales tax of 7% on the retail sale of tangible personal property and certain services. While the rate is consistent statewide, some municipalities levy additional local taxes. For example, the city of Jackson adds a 1% local tax, bringing the total sales tax rate within its limits to 8%.

While the general rate is 7%, certain goods are taxed at different rates. For instance, sales of automobiles and light trucks weighing 10,000 pounds or less are taxed at 5%. Farm tractors and manufacturing machinery receive a lower rate of 1.5%.

The state provides exemptions for several categories of goods, which removes them from the sales tax base entirely. One of the most significant exemptions is for prescription drugs. Other exempt items include many agricultural products, such as seeds and fertilizer, and sales to nonprofit hospitals.

Some localities impose special taxes on industries like tourism and hospitality, often applying to hotel stays and restaurant meals to fund local economic development and tourism promotion. While most groceries are exempt from sales tax, prepared foods intended for immediate consumption are taxable.

Mississippi Property Tax

Property taxes in Mississippi are a local matter, administered and collected by county and municipal governments. These taxes are a primary source of funding for local services, including public schools. The county tax assessor determines the “true value” of all real and personal property as of January 1st each year.

Mississippi’s property tax system uses assessment ratios based on property classification. Single-family, owner-occupied residential properties (Class I) are assessed at 10% of their true value. Most other real property (Class II) is assessed at 15% of its true value. A home with a true value of $150,000 would have an assessed value of $15,000.

The final property tax bill is calculated using a millage rate, which is set by local governing bodies like county boards and city councils. One mill represents $1 of tax for every $1,000 of assessed property value. For example, if a property has an assessed value of $20,000 and the total millage rate is 120 mills, the property tax would be $2,400 ($20,000 0.120).

The state offers a homestead exemption for owner-occupied residences, which reduces the property tax burden. For eligible homeowners, the first $7,500 of assessed value is exempt from certain property taxes. Homeowners who are 65 or older or are disabled may qualify for a greater exemption. Applications must be filed with the county by April 1st.

Other Notable State Taxes

Mississippi is phasing out its corporate franchise tax, a tax levied on a business’s capital. The tax rate is being incrementally reduced and is scheduled for full repeal on January 1, 2028. This elimination is intended to improve the state’s business tax climate.

The state also levies excise taxes on fuel, which are dedicated to funding transportation infrastructure. The tax on both gasoline and undyed diesel fuel is 18 cents per gallon. An additional environmental protection fee of 0.4 cents per gallon is also applied to petroleum products.

Excise taxes are also applied to specific consumer products. For tobacco, the state imposes a tax of $0.68 per 20-pack of cigarettes. Other tobacco products are taxed at 15% of the manufacturer’s list price. Alcoholic beverages are also subject to excise taxes, with beer taxed at $0.4268 per gallon.