How Mississippi income tax works: its own income, a $10,000 zero bracket, 4.0% and falling

Mississippi does not start its return from federal adjusted gross income or from federal taxable income. Form 80-105 rebuilds your income line by line under the state’s own definition, takes off its own adjustments, then its own standard or itemized deduction, then its own exemptions, and taxes what is left: nothing on the first $10,000 of taxable income and 4.0% on everything above it for 2026. The 4.0% is down from 4.4% in 2025, and it is scheduled to drop to 3.75% in 2027 and 3.0% by 2030 under House Bill 1 of 2025. After that it falls further only when revenue triggers allow, and no date is set for zero. For the return you file in 2027, the tax is real and the arithmetic is simple.

One consequence catches people every year: because Mississippi writes its own income rules, nothing Congress does below the federal AGI line reaches this return. The federal standard deduction and the federal deductions for tips, overtime, seniors, car-loan interest and qualified business income are invisible here. Tips and overtime that owe no federal tax still owe Mississippi 4.0%. What the state gives instead is in its own code, and most of it is retirement income: Social Security, pensions and IRA distributions taken at retirement are exempt in total and never go on the form.

Who files

A single resident files when gross income is more than $8,300 plus $1,500 for each dependent; a married couple files when combined gross income is more than $16,600 plus $1,500 per dependent. Anyone with Mississippi tax withheld should file to get it back. Gross income means Mississippi gross income, which leaves out Social Security and retirement income, so a retired couple living on a pension and Social Security may have no filing requirement at all. Part-year residents and nonresidents with Mississippi income file Form 80-205 instead; see Moving to Mississippi.

Where it starts: Mississippi income, built from scratch

Page 2 of Form 80-105 is the income statement. Wages from Form 80-107, the state’s income and withholding schedule, come first, then business income from federal Schedule C (line 39), capital gains from Schedule D (line 40), rents and pass-through income (line 41), farm income (line 42), interest and dividends from Form 80-108 Schedule B (lines 43 and 44), alimony received, taxable pensions and annuities (line 46), unemployment (line 47) and other income (line 48). Mississippi borrows the federal computation of each item but decides for itself which items count.

Social Security and railroad retirement benefits are exempt. Retirement income from federal, state and private retirement systems is exempt, which means line 46, “taxable pensions and annuities,” is for the exceptions: early distributions, deferred compensation paid before retirement, separation pay. Interest on U.S. obligations and Mississippi state and local bonds is exempt; other states’ municipal bond interest is taxable and has to be split out on Schedule B. Winnings from Mississippi casinos are not income at all. The casino withholds 3% at the window and that is the whole state tax; the W-2G stays off the return, the withholding earns no credit, and losses at Mississippi casinos cannot be deducted. Winnings from anywhere else are ordinary income. National Guard and Reserve pay comes off up to $15,000 per taxpayer on line 55.

The adjustments

Lines 50 through 60 are Mississippi’s version of the federal above-the-line adjustments. Deductible IRA contributions, self-employed SEP and SIMPLE contributions, the early-withdrawal penalty on a savings certificate, pre-2019 alimony paid, the self-employed health insurance deduction and health savings account contributions all come off here. Two lines are Mississippi’s own and have no federal counterpart: contributions to the state’s prepaid tuition program, MPACT, in full on line 56, and contributions to MACS, the Mississippi Affordable College Savings 529 plan, on line 57, up to $10,000 a year on a single or head-of-family return and $20,000 on a joint or combined return, made by April 15 without regard to extensions. A catastrophe savings account deduction sits on line 60 (verify). The result, line 13 of page 1, is Mississippi adjusted gross income.

The deduction: small, so itemize again

The Mississippi standard deduction has not changed in decades and is not indexed: $2,300 single or married filing separately, $4,600 married filing joint or combined (and for a surviving spouse in the year of death), $3,400 head of family. Many households who take the $32,200 federal standard deduction should itemize on Mississippi Form 80-108 Schedule A; the state lets you choose whichever gives the greater benefit regardless of the federal choice, with federal Schedule A as the worksheet. Mortgage interest, charitable gifts under the federal limits, medical expenses above 7.5% of income and property taxes all go on, with two Mississippi exceptions: Mississippi income tax itself, and any tax taken in its place, is never deductible, and losses at Mississippi gaming establishments are not deductible. The taxes line carries the federal limit; the 2024 booklet shows $10,000 ($5,000 married filing separately), and the 2025 booklet moves it to $40,000 ($20,000 married filing separately). With the state income tax off that line, for most Mississippians it is a property tax line.

The exemptions

The exemptions are where Mississippi shelters income. They, too, are fixed amounts that never move: $6,000 single, $12,000 married filing joint or combined, $6,000 each for married filing separately, $8,000 head of family. Then $1,500 for each dependent, $1,500 more for a taxpayer or spouse who is 65 or older, and $1,500 more for a taxpayer or spouse who is blind. The age and blindness amounts are for the taxpayer and spouse only, not dependents, and a person counts as 65 on the day before the 65th birthday. A married couple with two children claims $15,000.

On a joint or combined return the exemption and the deduction may be divided between the spouses however they choose. On separate returns each spouse gets half and anything unused cannot move to the other spouse.

The rate, and the combined return

Mississippi AGI, minus the deduction, minus the exemptions, is Mississippi taxable income, line 16. The tax is 0% on the first $10,000 of it and 4.0% on the rest. There are no local income taxes anywhere in the state; the 7% sales tax, 5% on groceries since July 1, 2025, and the gasoline tax are the other taxes a worker sees. Capital gains, dividends, interest and unemployment are taxed at the same 4.0% as wages; there is no preferential rate for gains.

The zero bracket is per taxpayer, not per return, and that is what the combined return is for. A couple where only one spouse has income files a joint return, one column, one $10,000 zero bracket. A couple where both spouses have income can file combined: each spouse’s income goes in its own column, Column A and Column B, the deduction and exemptions are split as they like, and each spouse computes tax separately before the two are added. That gives the couple two zero brackets, $20,000 of taxable income at 0% instead of $10,000, worth $400 at 4.0%. Software does this when both spouses have W-2s; a self-preparer who picks “joint” because that is the federal word gives up the $400.

The first $10,000 stays at 0% throughout. The Department’s General Information page shows 2025 through 2027; the later years are in the statute.

The credits

Mississippi credits are few and all nonrefundable: they take the tax to zero and no further. There is no state earned income credit and no child tax credit. The ones ordinary households see are on Form 80-401. The child and dependent care credit is 25% of the federal credit, allowed only if federal adjusted gross income is $50,000 or less, with no carryover. The long-term care insurance credit is 25% of premiums on a qualified policy, up to $500 a year. An adoption credit of up to $10,000 for a child who lived in Mississippi before the adoption and $5,000 for a child from elsewhere carries forward five years. Charitable credits for gifts to pre-approved organizations require the Department’s advance allocation and share a statewide cap. The credit for income tax paid to another state goes on line 18 from Form 80-160 and needs the other state’s return attached. The family credits are worked through in Credits and breaks for Mississippi families.

Withholding and estimated payments

Employers withhold from Form 89-350, the Mississippi withholding exemption certificate, on which the employee claims the exemptions that fit the household; the formula applies the standard deduction and 4.0% above $10,000. Pension and IRA payers generally do not withhold Mississippi tax, because the income is not taxed.

Estimated payments on Form 80-106 are required when withholding covers less than 80% of the year’s Mississippi tax and the tax is more than $200. They are due April 15, June 15, September 15 and January 15. The booklet gives only that 80%-of-this-year test; it states no prior-year safe harbor. Underpayment draws interest at 1/2% a month, figured on Form 80-320. Farmers and fishers with two-thirds of gross income from farming or fishing are excepted. The people caught are the self-employed, landlords, and anyone with a large gain or an early Roth conversion.

How to file

The return is due April 15, 2027. Mississippi allows the same extension the IRS allows, to October 15, with no state form, but it is an extension to file, not to pay: tax unpaid at April 15 draws interest at 1/2% a month plus a late-payment penalty of 1/2% a month up to 25%, and the payment goes in with Form 80-106. Direct deposit is available only on an e-filed return. TAP, the Department’s Taxpayer Access Point, takes payments and shows refund status without a login. An amended return is Form 80-105 with the amended box checked, within three years of the due date. The dates and forms are collected in Mississippi calendar and forms.

What trips people up

• Pension or IRA income carried onto line 46 because software copied every 1099-R. Only early distributions belong there.
• The federal tips, overtime or senior deduction expected to reduce Mississippi tax. None reach Form 80-105.
• The $4,600 standard deduction taken because the federal return took the standard deduction. Check Schedule A.
• A joint return when both spouses work; the combined return is worth up to $400.
• A casino W-2G reported as income, or the 3% withholding claimed as a credit.
• Mississippi income tax deducted on Schedule A, or out-of-state municipal bond interest left off Schedule B.
• A MACS contribution nobody mentioned, because the federal return did not ask.
• The extension treated as an extension to pay.