As competition to become the next zero-income-tax state heats up nationwide, Mississippi leaders are making it clear that they won’t let their state fall behind. Governor Tate Reeves and Speaker Jason White have both made abolishing the income tax their top priority.
Legislation filed this week would immediately slash the income tax to 3% and reduce the tax by an additional 0.3% until total elimination is achieved by the end of the next decade.
Thanks to the steady leadership of Governor Reeves and House Republicans, Mississippi has built an admirable track record of success. The last few years have seen significant tax cuts. A highlight of those achievements was a flat tax that took effect in 2023, initially at a rate of 5%.
Now, armed with a lower tax rate that treats every taxpayer the same, the new legislature is set to make even more progress on reducing the burden of government on hard-working families and businesses.
Lawmakers are realizing that despite all of their incredible progress, Mississippi’s current income tax rate of 4.7% risks becoming uncompetitive both regionally and nationwide – especially after Louisiana slashed its rate to a flat 3% in special session last year. It’s time for Mississippi to take ambitious action to catch up with its neighbors.
Speaker Jason White is looking forward to taking ambitious action so that Mississippi has a real shot at catching up with its neighbors.
“The House is ready,” he wrote on X. “The time is now. Income tax elimination is our #1 priority.”
“We will Build Up Mississippi by eliminating the income tax to further our state’s competitive advantage and award our workforce,” White added.
Currently, eight states levy no income tax whatsoever on any kind of personal income. New Hampshire became the 8th true no-income-tax state on January 1, and incoming Governor Ayotte has sworn never to resurrect that tax from the dead.
While Washington State does not tax wage earnings, it still imposes a hefty 7% capital gains tax, which has already driven out dozens of wealthy individuals and businesses. Hammering the wealthy with new and unnecessary taxes ultimately extracts wealth not only from state coffers, but also from the broader Washington economy, where all participants benefit from increased capital investment. Unfortunately, Washington state is moving in the opposite direction from the twelve states whose leadership has expressed a desire to go to zero.
“Eliminating the state income tax would be game changer for Mississippi. It will lead to massive investment, growth, and new taxpayers moving into the state,” said Americans for Tax Reform President Grover Norquist. “There is no time like the present for Mississippi to continue its journey down the increasingly crowded path to zero.”
Mississippi would join twelve states that have already committed to phasing out their income tax, mainly through revenue triggers. Some of those states have already enacted legislation to do just that, including West Virginia, Georgia, and Kentucky. Revenue triggers are the most responsible method by which to phase down the income tax; they act as a quasi-spending-cap, requiring permanent rate reduction whenever revenue comes in above target.
States with zero income taxes benefit tremendously from the ensuing immigration from other states and economic knock-on effects of increased investment. After Washington imposed an income tax, one particularly notable billionaire immediately moved his family – and his investment dollars – to Miami, Florida, where income taxes exist only in nightmares. And the population growth, economic growth, and even government revenue growth of those eight no-income-tax states have far outstripped their high-tax blue-state neighbors.
ATR celebrates Mississippi Republicans’ commitment to lowering taxes and the growing support for a full income tax phase-out. As the session continues, lawmakers should continue to resist the lure of bigger government and prioritize returning money to the wallets of the industrious Mississippians who earned it.
