The Senate Finance Committee voted Thursday to advance legislation to reduce the state income tax and the sales tax on groceries while raising the gasoline tax.
Republican senators voted to advance the measure, which they say will boost economic activity in Mississippi. Democrats on the committee argued cutting the income tax while raising the gas tax would benefit corporations and harm the working poor.
The Senate plan amounts to a net tax cut of $326 million, a more modest sum than the $1.1 billion net cut passed by the House. The Senate would reduce the state’s flat 4% income tax to 2.99% over four years, a provision that’s likely to become a point of contention with the House, which has pushed for eventual full elimination of the income tax.
If Mississippi were to adopt the House plan, it would join nine other states that don’t have a state income tax. The Senate proposal to maintain the income tax but lower it to 2.99% would make Mississippi’s income tax the nation’s third-lowest, according to Senate Finance Chairman Josh Harkins, a Republican.
Harkins, the Senate plan’s lead author, said the legislation would help Mississippi draw corporate investment and attract new residents migrating from higher-tax states.
“While it may not be only tax policy, it’s tax policy coupled with regulation and things that induce people to move into the state,” he said. “But it’s part of the equation, and I think that’s the effort that we’re all trying to get here.”
The Senate proposal would also reduce the state’s 7% sales tax on grocery items, the highest in the nation, to 5% starting July 2026.
The Senate would raise the state’s 18.4-cents-a-gallon gasoline excise by three cents each year over the next three years, eventually resulting in a 27.4 cents per gallon gas tax at completion. This is an effort to help the Mississippi Department of Transportation with a long-running shortfall of highway maintenance money.
Democratic Sen. Hob Bryan said the Republican majority’s “obsession” with abolishing or lowering the income tax was being driven by out-of-state corporations and anti-tax activists such as Grover Norquist, who famously said his goal was to shrink government to the size “where we can drown it in the bathtub.”
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“The people who are driving this, the ones who actually know what they’re doing, I’m not talking about the useful idiots,” Bryan said. “They care nothing about roads. They care nothing about water. They care nothing about sewer. They care nothing about public safety. They care nothing about public schools. What they care about is simply reducing government to the size that it could be drowned in a bathtub, as an end in and of itself.”
The debate over tax policy is unfolding as Mississippi has made a push to lure technology companies to the state with generous tax incentives. Republican Sen. Daniel Sparks said the Senate plan would strengthen the state’s effort to create jobs and attract new residents.
“No, I don’t think if you go to zero income tax people are lined up at the state line ready to spring into Mississippi. I’ll concede that point to you,” Sparks said. “But good tax policy brings business, which brings jobs, which brings opportunity.”
Bryan said most people don’t choose where to live based on tax policy. He said the Senate and House tax overhauls would lead to the defunding of public services and shower benefits on corporations instead of workers.
“The tax structure in Mississippi is geared toward making life worse and worse for (the working poor) and shifting more and more of the tax burden to them,” Bryan said.
The Senate announced its plan after the House passed a plan last month that eliminates the income tax over a decade, cuts the state grocery tax and raises sales taxes and gasoline taxes.
In a bid to increase economic development, Republican Gov. Tate Reeves has made the full elimination of the state income tax his central legislative priority this session.
It remains unclear if Reeves would sign a tax cut package into law that does not fully eliminate the income tax.
The Senate bill now goes to the floor for a vote before the full chamber.
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