NEW: Red State Eliminates Income Taxes
Mississippi has officially joined the small group of states that do not tax personal income. Governor Tate Reeves signed House Bill 1 — dubbed the “Build Up Mississippi Act” — into law Thursday, eliminating the state’s individual income tax through a phased-in process over the next several years.
“I am proud to sign into law a complete elimination of the individual income tax in the state of Mississippi,” Governor Tate Reeves (R-MS) said. “Let me say that again: Mississippi will no longer tax the work, the earnings, or the ambition of its people.”
“The legislation I’m signing today puts us in a rare class of elite, competitive states. There are only a handful of states in the country that do not tax income. Today, Mississippi joins their ranks – and in doing so, we plant our flag.”
The new law cuts Mississippi’s current individual income tax rate of 4.4% down to 3% by 2030, with gradual 0.25% decreases each year starting in 2026. If state revenues hit specific growth benchmarks, those reductions will continue annually until the rate eventually falls to zero.
Governor Reeves has long made the elimination of the state income tax a cornerstone of his political platform. Wednesday’s signing marks the culmination of years of effort, dating back to his time as lieutenant governor.
Mississippi believes in a simple idea: government should take less so that you can keep more!
Income Tax Elimination signed into law! https://t.co/o6C1Y2IugH
— Governor Tate Reeves (@tatereeves) March 28, 2025
“This is more than a policy victory,” Governor Reeves continued. “This is a transformation. And it’s a transformation that I have believed in, fought for, and worked toward for many years. From my days as lieutenant governor to my first campaign for this office – and every legislative session since – I have made this my mission.”
“Because I believe in a simple idea: that government should take less so that you can keep more. That our people should be rewarded for hard work, not punished. And that Mississippi has the potential to be a magnet for opportunity, for investment, for talent – and for families looking to build a better life.”
He credited legislative leaders including Speaker Jason White and Lt. Gov. Delbert Hosemann for their partnership in delivering what he called a win for working families.
While Mississippi’s workers stand to benefit, the tax cuts come with trade-offs. To offset potential revenue losses, the law also increases the state’s gasoline tax. Starting July 1, 2025, drivers will see a three-cent increase per gallon every year for three years — rising from the current 18 cents to 27 cents per gallon by 2027.
Still, the governor emphasized that the bill reflects the will of the people and a shift toward long-term economic growth. The legislation also reduces the grocery sales tax from 7% to 5%, giving families more breathing room at the checkout line.
With this law, Mississippi becomes the latest state to aggressively court new businesses and residents through tax reform—joining states like Texas, Florida, and Tennessee in the no-income-tax club. As of 2025, ten states do not impose a state income tax, offering potential savings for residents and appealing options for retirees and high earners.
These states include Alaska, Florida, Nevada, South Dakota, Texas, Tennessee, Washington, Wyoming, and New Hampshire. While New Hampshire doesn’t tax wages, it does tax interest and dividends. To offset the loss in revenue, most of these states rely on higher sales, property, or tourism taxes.
The tax-friendly approach has fueled population booms in places like Texas and Florida, as more Americans look to escape high-tax states in favor of regions with fewer financial burdens.
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