What’s new in Mississippi for 2026: the rate drops to 4.0%, and almost nothing else moves

The rate on Mississippi taxable income over $10,000 is 4.0% for 2026, down from 4.4% in 2025. That is the whole story for most households. The first $10,000 of taxable income is still taxed at 0%, the standard deduction is still $2,300 single and $4,600 joint, the exemptions are still $6,000 and $12,000, and every kind of retirement income is still exempt in full. The federal deductions for tips, overtime, seniors and car-loan interest enacted in July 2025 never reach the Mississippi return, because Mississippi builds its own income from scratch and has never used the federal deductions. The one place the federal law landed is Mississippi Schedule A, where the taxes line now carries a $40,000 limit instead of $10,000. There was no statewide measure on the November 3, 2026 ballot. The 2026 Legislature left the rate schedule alone, so 3.75% follows in 2027.

Mississippi is a state where “what’s new” is a short list, and that is by design. Nothing on the return is indexed to inflation. The deduction and exemption figures have not moved in years, and the Department of Revenue publishes a one-page General Information table each January that says the same thing it said the year before, with one rate changed. For 2026 the Department posted that table on January 7, 2026: 4.4% for 2025, 4.0% for 2026, 3.75% for 2027, and 0% on the first $10,000 throughout.

The rate cut, and the schedule behind it

The 4.0% rate is the last step of a 2022 law and the first step of a 2025 one. House Bill 531 of 2022 collapsed the old brackets into a single rate above $10,000 and stepped it down from 5% to 4.4% by 2025 and 4.0% in 2026. House Bill 1 of 2025, the Build Up Mississippi Act, signed March 27, 2025, picks up from there and keeps cutting: 3.75% for 2027, 3.5% for 2028, 3.25% for 2029 and 3.0% for 2030. The 2025 Form 80-100 instruction booklet prints that schedule in its What’s New section.

The first $10,000 of taxable income is taxed at 0% in every year. On a married combined return each spouse computes tax separately, so a two-earner couple gets two $10,000 zero brackets.

After 2030 the law stops naming rates and starts naming conditions. In any year from 2031 on, if the state’s rainy-day fund is full and the prior year’s general fund collections exceeded the next year’s appropriations by enough, the rate drops another 0.2, 0.25 or 0.3 points, depending on how large the surplus was. When the rate reaches zero, the tax is gone. No year is written into the law for that. At the fastest allowed pace, 0.3 points every year starting in 2031, the rate would reach zero around 2040. At a slower pace, or with a few years where the trigger is not met, it takes longer. Anyone who heard that Mississippi “eliminated the income tax” heard the headline and not the schedule; for the 2026 return, the tax is 4.0%.

What the 2025 federal law did to the Mississippi return

Most states begin their income tax return by copying federal adjusted gross income or federal taxable income onto line 1. Mississippi does not. Form 80-105 builds Mississippi gross income line by line under the state’s own statute, subtracts a short list of Mississippi adjustments, then subtracts the Mississippi standard or itemized deduction and the Mississippi exemptions. Federal AGI appears nowhere on the form except as a test for one credit. That one design decision settles nearly every conformity question raised by the July 2025 federal law.

The Department had published no guidance for individuals on the 2025 federal law as of early November 2026. The 2026 Form 80-100, due in late 2026 or early 2027, is the place to check.

The practical effect runs one direction. A Mississippi worker whose federal return drops by $4,000 of tips or $8,000 of overtime sees no corresponding drop on Form 80-105. The state return taxes the W-2 as it always has. Nothing has to be added back, because nothing was ever subtracted. The same is true of the federal senior deduction: a 67-year-old who still works and takes the $6,000 federal deduction gets $1,500 from Mississippi, which is what she got last year.

Other changes that touch a household in 2026

Grocery sales tax, 5%. HB 1 cut the sales tax on groceries from 7% to 5% on July 1, 2025 (Department Notice 72-25-03). The 2026 tax year is the first full calendar year at the lower rate. The general rate stays 7%. For a household spending $150 a week on groceries that is about $156 a year.

Gasoline tax, 24 cents. The same bill raises the state excise on gasoline and diesel in three steps: 18 to 21 cents on July 1, 2025, to 24 cents on July 1, 2026, and to 27 cents on July 1, 2027, then indexes it every other year from 2029. A driver using 600 gallons a year pays about $18 more in the second half of 2026 than in the first.

Casino slot withholding threshold, $2,000. Effective January 1, 2026, a Mississippi casino withholds the 3% Mississippi tax on a slot jackpot of $2,000 or more instead of $1,200 or more (Department notice of December 23, 2025; an updated notice followed on September 28, 2026). The 3% is a final tax: Mississippi casino winnings stay off Form 80-105 and the withholding is not refundable. The threshold change means a $1,500 jackpot is now paid without Mississippi withholding and, under the Department’s treatment of in-state gaming winnings, without Mississippi tax.

The SALT line on Schedule A. The $40,000 limit is the one item from the July 2025 federal law that changed a figure on a Mississippi form. It matters to the minority of Mississippians who itemize for the state, and because the Mississippi standard deduction is small, that minority is larger than the federal one. A homeowner who paid $9,000 of property tax and took the federal standard deduction should run Mississippi Schedule A anyway; see How Mississippi income tax works.

Disaster postponements. Residents of Covington, George, Greene, Hancock, Harrison, Pearl River, Stone and Wayne counties affected by Tropical Storm Arthur (June 18, 2026) have until February 1, 2027 for 2026 estimated payments that were due on or after June 18, 2026, and for 2025 returns on extension (IRS release MS-2026-03; the Department posted matching relief on August 18, 2026). A separate relief notice for spring storms in other counties set a November 2, 2026 date. Payments due April 15, 2026 were not postponed.

What the 2026 Legislature did and did not do

The session that ended in April 2026 touched the individual income tax very little. SB 2869, to rescind the HB 1 rate cuts, failed on February 25, 2026. HB 204, to exclude overtime from Mississippi gross income, died in committee. HB 4014, to exclude college athletes’ name-image-likeness compensation, died. SB 2867, approved April 8, 2026, revised the employer child-care credit, which is a business credit and does not appear on Form 80-105. No bill changed a deduction, an exemption or a filing threshold. No bill matched the federal tips or senior deductions. Nothing was placed on the November 3, 2026 ballot.

The result is that the 2026 return will look like the 2025 return with one number changed. For a filer who knows last year’s Mississippi tax, multiplying it by 4.0 ÷ 4.4, about 0.91, gives this year’s tax to within a few dollars if income held steady.