Mississippi Senate unveils proposal to reduce taxes on groceries, eliminate some car tag fees, offer taxpayers rebate

Published 2:40 pm Tuesday, February 1, 2022

Mississippi Senate leaders unveiled a tax cut proposal Tuesday that they described as a sustainable way to reduce what people pay to the government while maintaining enough money to pay for schools and other services.

The plan would reduce the income tax, but it would not eliminate that tax as House leaders are proposing.

The Senate plan also would reduce the grocery tax from 7% to 5% and eliminate some of the fees that people pay on car tags. It also includes a one-time rebate of up to $1,000 for people who pay income taxes.

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“This is … a priority for us to do something that is responsible and durable,” said Senate Finance Committee Chairman Josh Harkins, a Republican from Brandon.
The Senate plan will compete with a proposal that the House passed last month.

The House plan would take more money out of the state budget by eliminating the state income tax over several years. It would reduce the grocery tax from 7% to 4% and reduce the cost of car tags. The House plan also would increase the sales tax on clothing and many other items from 7% to 8.5%.

The House and Senate are both led by Republicans, and Republican Gov. Tate Reeves has said repeatedly that he wants to reduce what people pay in taxes.
“My ultimate goal remains: Eliminate the income tax,” Reeves told reporters Tuesday.

Mississippi has a tax deduction of $2,300 for a single person or $4,600 for a married couple. That means the state does not tax that amount of income.

Under the current tax laws, Mississippi does not tax the first $3,000 of income above those amounts. The state has a 3% tax on income from $3,000.01 to $5,000, a 4% tax on $5,000.01 to $10,000 and a 5% tax on all taxable income over $10,000.

Under a tax cut plan passed years ago, the 3% bracket disappears after this year.

The House proposal would phase out the 4% and 5% brackets over several years. The Senate proposal would phase out the 4% bracket over four years and leave the 5% bracket in place.
Republican Lt. Gov. Delbert Hosemann, who presides over the Senate, described the Senate tax cut plan as “simple, straightforward and sustainable.”

The Senate faces a Feb. 23 to vote on its tax plan. March 26 is the deadline for negotiators from the House and Senate to come up with a final plan.