This US State Is Set To Become The 10th With No Income Tax
What do Florida, Washington, Montana, Texas, New Hampshire, South Dakota, Tennessee, Wyoming, Alaska, and Nevada have in common? These nine states have no state income tax. And come 2039, they might be in new company. Last month, Mississippi Governor Tate Reeves signed a bill putting the oft-overlooked southern state on the path to ending its income tax.
- Today, Mississippi has a flat income tax of 4.4% — which is set to decline to 4% next year, 3% by 2030, and further, based on meeting certain state revenue targets.
- In exchange, Mississippi plans to axe the sales tax on groceries from 7% to 5% — covering these cuts by levying a higher gas tax and cutting state spending.
Tax-free state of mind: In tax year 2022, Mississippi received $2.53 in federal funding for every $1 remitted in income taxes, revealing heavy reliance on federal assistance. Further, Medicaid or similar programs like CHIP covered over a fifth of the state’s population. However, wealthy transplants might have their eyes on the state because of the new policy, as well as its affordable cost of living. Ultimately, if Mississippi’s dreams of a tax-free haven come to pass, it’ll likely only be felt by the state’s wealthiest. Per ITEP, the lowest-income and middle-class residents will receive annual tax savings of just $3 and $795, respectively. The state’s wealthiest? They’ll receive $41.4K per year.