Today the Mississippi Senate released a summary of its proposal for income tax reform. Readers may recall the House passed its proposal, HB 531, and passed it on January 13 (see our prior coverage). That bill has been transmitted to the Senate and referred to the Finance Committee.
While the Senate has not yet introduced the actual bill, the summary released today contained the following highlights:
- An immediate income tax rebate of up to $1,000 for “citizens with tax liability”;
- A four-year phase out of the current 4% tax bracket applicable to taxable income between $5,000 and $10,000 (recall the 3% bracket on the first $5,000 was recently eliminated);
- An immediate reduction in the grocery sales tax rate from 7% to 5%; and
- Immediate elimination of all state fees included in car tags that go to the general fund
This proposal shares very few features with the earlier House proposal, and is distinguishable on the following important points:
- The Senate proposal contains no complete elimination or phase out of the individual income tax;
- Elimination of 4% bracket may apply to corporations as well as individuals, whereas the House bill eliminated the individual tax by increasing personal exemptions; and,
- The Senate proposal contains no sales tax increases of any kind
Once the actual Senate bill is released, the specific language may clarify details related to how the income tax rebate and 4% bracket elimination will work, as well as other important questions. While the eventual path of Mississippi income tax reform remains unpredictable for this session, Jones Walker will continue to monitor this and other related developments and post updates as available.