Income Tax Deal Reached on HB 531, The Mississippi ‘Tax Freedom’ Act of 2022

NEMiss.News Editor’s Note: After bickering for most of this year’s term, Republicans in the state legislature have finally reached a compromise on changing the state’s income tax code. House Speaker Philip Gunn wanted to completely eliminate the income tax over a period of several years and make up the revenue by raising the sales tax.. Lieutenant Governor Delbert Hosemann, who dominates the State Senate, refused to let it happen. They finally compromised with a much smaller income tax reduction. This whole episode, as with much else in the Mississippi Legislature, is the result of deep divisions among the Republicans, who have a super majority in the legislature and hold all of the state’s top elective offices. State government is in a sort of gridlock because of what Mississippi Today Editor Adam Ganucheau calls “Mississippi’s Three Republican Parties.” Follow the link below this story to read Ganucheau’s perceptive observation about what is and is not happening in Jackson.

Most of the following comes from Speaker Gunn’s account of the compromise:

With the signing of a conference report by House and Senate Conferees, a deal has been reached on The Mississippi Tax Freedom Act of 2022 and the elimination of the state personal income tax. The agreement reached is one that both chambers feel confident will lead to “further economic prosperity for the people of Mississippi.”

Here are some key points of the compromise plan:
● This will be the largest tax cut in Mississippi history – $525 Million per year by 2026.
● By 2023, Mississippi will allow filers to exempt more income from taxation than any
other state with a personal income tax.
● By 2026, Mississippi will have the 5th-best marginal tax rate of any state with a personal
income tax.
● The legislation calls for the plan to be examined by 2026 to determine the most rapid
and prudent next steps to continue on the path to total personal income tax elimination. The net result of this provision is that in four years the tax cut idea will come up for review in which it might be affirmed, changed, or killed altogether.
● Effective tax year 2023, the 4% bracket is eliminated. Single filers earn the first $18,300
income tax-free, with married filers earning the first $36,600 income tax-free.
● The 5% bracket drops to 4.7% for 2024, 4.4% for 2025, and 4.0% for 2026.
● A single filer taking the standard deduction and earning $40,000 saves $417 per year. A
married couple taking the standard deduction and earning $80,000 saves $834 per year.

Here’s the link to Adam Ganucheau’s comments: https://mississippitoday.org/2022/03/28/mississippi-republican-party-factions-income-tax/