This story will be updated.
In a stunning move, the House on Thursday morning voted 92-27 to agree with the Senate’s latest proposal to eliminate the state income tax and increase the gasoline tax, perhaps ending what could have been a raucous intraparty debate at the Capitol for the next two weeks.
“Let’s end the tax on work once and for all in the state of Mississippi,” House Ways and Means Chairman Trey Lamar said.
If the measure is passed into law, then oddly, a handful of Senate Democrats would have been crucial in passage of the largest tax cut in state history, and a sea change towards more regressive taxation that puts more burden on the poor and those of modest means through increased consumption taxes.
The vote was a surprise. The House and Senate up until the vote had appeared to still be far apart on particulars of a tax overhaul. The bill approved Thursday was held on a motion to reconsider by the GOP House leadership, and Gov. Tate Reeves, House Speaker Jason White and Lt. Gov. Delbert Hosemann all declined comment on the issue — bizarre for such monumental policy.
It’s unclear whether Reeves would sign the measure if it makes it to his desk.
Despite calling for elimination of the income tax, Gov. Reeves has in the past vehemently opposed “tax swap” increases in gasoline or sales taxes along with cuts, and has declined comment on whether he would support the House or Senate proposals with included tax increases. He has not offered any specific plan of his own.
Senate Finance Chair Josh Harkins said he and Lamar exchanged text messages Thursday morning, and Lamar indicated a motion to concur might be coming. Harkins sees the motion to reconsider as a procedural hurdle, and that the Senate bill wouldn’t change.
“I think they passed the negotiated version, I think that’s the final version that you’re going to see. That was a product our talks and discussion,” Harkins said. “I’m pleased that they concurred on the changes that we made and came up with through discussions. They’ve got one more hurdle to clear with tabling the motion to reconsider, and then it will be more final than it is right now.”
In their conversation on Thursday, Harkins said Lamar was excited about getting a final product across the finish line: “I think he was relieved after a lot of work on this over the last several years,” Harkins said. “Their goal was elimination, and they got a plan to eliminate.”
Rep. Karl Oliver, a Republican from Winona who is part of House leadership, held the bill on a procedural motion, meaning lawmakers could still debate and work on the proposal before it goes to the governor’s office for consideration.
The proposal would decrease the 4% income tax rate by .25% each year from 2027 to 2030 and leaves it at 3% in 2030. After it reaches 3%, the income tax would be reduced with “growth triggers” or at a proportional rate depending on the difference between the state’s revenue and spending plans that year.
The proposal also would reduce the sales tax on groceries from 7% to 5%, increases the 18.4-cents-a-gallon gasoline tax by 9 cents over three years and change benefits for government employees hired after March 2026 to a more austere retirement plan.
Gov. Reeves and Speaker White, a Republican from West, have forcefully pushed lawmakers to eliminate what they refer to as the “tax on work.” Hosemann and the Senate had been reluctant on full elimination of the tax, urging caution in uncertain economic times and calling for only a cut to the tax instead. However, the Senate this week had passed a counter offer, that would eliminate the income tax over many years, provided economic growth “triggers” are met along the way.
The plan the House voted to send to the governor — pending the holding motion — on Thursday would increase the tax on gasoline by a total of 9 cents a gallon over three years, then increase along with road construction prices thereafter. The House had at first proposed a 5% sales tax on gasoline, then countered with a 15 cents a gallon increase.
The Senate had refused to entertain the House’s proposal to include an increase in the state’s sales tax. The latest House offer would have increased sales taxes from 7% to 8%. It’s original proposal would have increased it to 8.5%/
Mississippi is perennially among the most federally dependent states, receiving nearly a 3-1 return for every dollar in federal taxes it pays. Some Democratic lawmakers have said that, given the uncertainty surrounding the federal spending cuts, now is not the time to drastically rework the state’s tax code. Others had warned that a shift from income taxes to higher sales and gasoline taxes would help the wealthy and hurt those of more modest means and retirees.
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