Mississippi Governor Signs Law Phasing Out Individual Income Tax

The new legislation cuts the individual income tax rate to 3 percent by 2030. After that, it will decrease every year until it is eliminated.

Mississippi Republican Gov. Tate Reeves delivers a televised address prior to signing a bill retiring the last state flag in the United States with the Confederate battle emblem, at the Governor's Mansion in Jackson, Miss., on June 30, 2020. Rogelio V. Solis-Pool/Getty Images

Mississippi Gov. Tate Reeves has signed historic legislation eliminating individual income tax in the state.

Reeves celebrated the new law at a signing ceremony at the governor’s mansion on Thursday, calling it a “turning point” in the state’s history.

“Mississippi will no longer tax the work, the earnings, or the ambition of its people,” Reeves said in a statement on X. “This is more than a policy victory. 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.”

The new legislation, House Bill 1, cuts the individual income tax rate to 3 percent by 2030. After that, it will decrease every year until it is ultimately eliminated entirely.

The legislation signed by Reeves also decreases the tax on grocery sales from seven percent to five percent.

Reeves said the new law would make Mississippi a magnet for corporate investment and attract workers from other states.

“This law means more money in your pocket. It means more jobs in your town. It means a future with more opportunity for your children and grandchildren,” the governor said.

Mississippi’s decision has faced major criticism from local officials and experts. The new law phases out the tax without raising another tax, prompting concerns over how the state would offset its cash reserves.

Neva Butkus, a senior analyst at the Institute on Taxation and Economic Policy, projected that the state’s new law will likely result in a $2.6 billion reduction to the current $7 billion general fund budget.

“What the state is essentially committing to is a very extreme and dramatic loss of revenue during a very tumultuous time during which the state might be reckoning with large federal cuts to social programs that many Mississippians rely on,” Butkus said. “And they’re doing all of this while creating a windfall for the state’s wealthiest residents in the poorest state in the union.”

The new legislation builds upon House Bill 531, which returned half a billion dollars to taxpayers in what the governor’s office described as the biggest tax cut in the state’s history at the time.

“The elimination of the income tax is not just a win for our economy. It’s a win for freedom. A win for families. A win for the idea that Mississippi can lead—that we will lead—in the century to come,” the governor said.

Reeves noted that there are only a handful of states in the country that do not tax income. Whether other states will follow suit remains to be seen. California gubernatorial candidate Chad Bianco recently said that if he’s elected to office, he will immediately work on a plan to “get rid of” the Golden State’s income tax.

“Other states have done it. There are nine states that don’t have a state income tax,” Bianco said in a video posted to X. So why does the greatest state in the country have an income tax? I believe that our hard workers in California could spend their money far better than their government.”

The Associated Press contributed to this report.

From NTD News