Mississippi does not have a state income tax

Mississippi is one of nine states with no state income tax on wages, salaries, or other earned income. You will not owe Mississippi state income tax on money you earn from a job, self-employment, or most other sources. This applies whether you live in Mississippi full-time, work there, or both.

However, Mississippi does tax certain types of income that are not wages. The state taxes interest, dividends, capital gains, and retirement distributions under specific rules. If your income comes entirely from wages or salary, you have no state income tax obligation in Mississippi.

Federal income tax is separate and still applies. Even though Mississippi has no state income tax, you must still file federal taxes and pay federal income tax to the IRS if your income exceeds the federal threshold for your filing status.

Key Takeaways

  • Mississippi has no tax on wages, salaries, or earned income from employment.
  • The state does tax interest, dividends, capital gains, and some retirement income, though rates and thresholds vary by income type.
  • Federal income tax is required regardless of Mississippi's state tax status.
  • If you move to or from Mississippi, you may owe taxes to both states during the transition year depending on when you moved and your income sources.

What types of income Mississippi does tax

Mississippi taxes interest and dividend income at a flat rate. The current rate is 5 percent on interest and dividends above a certain threshold. This applies to money earned from savings accounts, bonds, stocks, and similar investments.

The state also taxes capital gains — profit from selling property, stocks, or other assets — at the same 5 percent rate. If you buy a stock for $1,000 and sell it for $1,500, the $500 gain is subject to Mississippi's capital gains tax.

Retirement distributions receive partial treatment. Distributions from IRAs, 401(k)s, and similar retirement accounts are generally taxed as ordinary income under Mississippi law, though certain military pensions and federal pensions receive exemptions. The rules for what portion of a retirement distribution is taxable depend on the type of account and your age.

Income from rental property, business operations, and other sources not classified as wages is also taxable at Mississippi's regular income tax rates, which range from 3 to 5 percent depending on your total income bracket.

How Mississippi's income tax brackets work for non-wage income

Mississippi uses a progressive tax system for income that is taxable. This means the rate increases as your income increases. The brackets and rates change annually and depend on your filing status — single, married filing jointly, head of household, or married filing separately.

For example, a single filer might pay 3 percent on the first portion of taxable income, 4 percent on the next portion, and 5 percent on income above a certain threshold. A married couple filing jointly has different bracket thresholds. You will need to check the current year's tax tables from the Mississippi Department of Revenue to find the exact brackets for your filing status.

The brackets apply only to income that Mississippi taxes — primarily interest, dividends, capital gains, and business income. Wage income is not subject to these brackets because Mississippi does not tax wages at all.

What happens if you move to or from Mississippi mid-year

If you move to Mississippi during the year, you owe Mississippi tax only on income earned after you arrived. If you move away from Mississippi, you owe Mississippi tax only on income earned before you left. You will also owe taxes to your new state on income earned there, so you may file returns in two states for the year you moved.

Most states have agreements to prevent double taxation, but the specifics depend on which state you moved to and what type of income you earned. If you earned wages in both states, each state taxes only the wages earned within its borders. If you earned investment income, the rules are more complex and depend on your residency status on the date you earned the income.

Keep records of when you moved, where you worked, and which state you lived in on key dates. You will need these details if you file in multiple states.

Federal taxes still apply even without state income tax

Mississippi's lack of state income tax does not change your federal tax obligation. The IRS requires you to file a federal return and pay federal income tax if your income exceeds the threshold for your filing status and age. In 2024, a single person under 65 must file if they earned more than $14,600 in wages.

Federal tax rates are separate from Mississippi's rates and are set by federal law. Your federal return is filed with the IRS, not with Mississippi. You cannot deduct Mississippi taxes from your federal return because Mississippi does not impose an income tax on wages.

Some people confuse state and federal taxes and assume that living in a state with no income tax means they owe no taxes at all. That is not correct. You still owe federal taxes; you simply do not owe state income tax on wages.

Other Mississippi taxes you may owe

Mississippi has no state income tax on wages, but the state collects revenue through other taxes. Sales tax is charged on most purchases at the point of sale. The state sales tax rate is 7 percent, though some counties add local sales tax on top of that.

Property tax is owed on real estate and, in some cases, personal property like vehicles. Property tax rates vary by county and are set by local assessors. If you own a home or land in Mississippi, you will receive a property tax bill from your county.

Excise taxes apply to specific goods like gasoline, cigarettes, and alcohol. These are included in the price you pay at the pump or store. Mississippi also has a corporate income tax on business profits, which is separate from personal income tax.

Frequently Asked Questions

Do I have to file a Mississippi tax return if I live there?

Only if you have income that Mississippi taxes — interest, dividends, capital gains, or business income above certain thresholds. If your only income is wages, you have no Mississippi tax return to file. You still file a federal return if your income exceeds the federal threshold.

If I work in Mississippi but live in another state, do I owe Mississippi tax?

No. Mississippi does not tax wages, regardless of where you work. You owe income tax to the state where you live on your wages. If that state also has no income tax, you owe no state income tax on your wages anywhere.

Are retirement distributions taxed differently in Mississippi?

Most retirement distributions are taxed as ordinary income under Mississippi law. However, certain military pensions and federal pensions receive exemptions. The treatment depends on the type of account and the source of the distribution, so check with the Mississippi Department of Revenue or a tax preparer for your specific situation.

Can I deduct Mississippi taxes from my federal return?

No, because Mississippi does not impose an income tax on wages. You can deduct state and local taxes paid to other states, but only up to $10,000 per year under current federal law. Since you pay no Mississippi income tax on wages, there is nothing to deduct.

What if I earned income in Mississippi and another state in the same year?

You owe Mississippi tax only on income earned in Mississippi that falls into a taxable category — interest, dividends, capital gains, or business income. Wages are not taxed by Mississippi regardless of where earned. You owe the other state tax on income earned there according to that state's rules.