What Changes in Your Paycheck in Mississippi
Your paycheck in Mississippi shows a Mississippi state income tax line item that grows progressively with income, starting at 4% for the first $1. However, because the brackets are extremely compressed (only two brackets), virtually all middle and high earners immediately reach the 5% rate on almost all income For a $1 salary, you might see ~ $1 annually (~ $1 per biweekly paycheck) for state tax, reflecting that most income is taxed at 5%. Mississippi paychecks only show state and federal tax deductions—no local income tax line items. The progressive brackets are so compressed that Mississippi effectively operates like a flat 5% tax state for most taxpayers Retirees see no state tax on retirement income distributions, making Mississippi attractive for those relying on retirement savings.
Example State Tax in Mississippi
What you'll pay in Mississippi state income tax at different salary levels (single filer, no deductions):
| Gross Salary | State Tax (Year) | Effective Rate |
|---|---|---|
| $50,000 | $2,400 | 4.8% |
| $75,000 | $3,650 | 4.9% |
| $100,000 | $4,900 | 4.9% |
| $150,000 | $7,400 | 4.9% |
Use the calculator above to see your exact take-home pay with your filing status and deductions.
Is Mississippi Better for You?
Mississippi works well for:
Mississippi works best for retirees who benefit from exemptions on Social Security and most retirement income, making the state attractive for those relying on retirement savings. The effective 5% income tax rate (due to compressed brackets) is moderate compared to higher-tax states. However, Mississippi's high 7% sales tax means big spenders pay significantly at the point of sale. Savers and retirees who spend modestly may find Mississippi's structure favorable due to the retirement income exemptions.
Mississippi may not be ideal if:
Mississippi is challenging for big spenders due to the high 7% state sales tax (one of the highest in the nation), and lower-income workers who spend a high percentage of income on taxable goods face a regressive tax burden. Someone earning $1 who spends $1 annually on taxable goods might pay $1 in income tax (5% effective) plus $1 in sales tax (7%), totaling $1 (10.6% of income). The high sales tax disproportionately affects lower earners. If you're a big spender or lower-income worker, states with lower sales taxes may be more favorable.
Key Facts That Affect Your Take-Home Pay
- Mississippi uses a progressive income tax system with just two brackets, starting at 4% for the first $1 of income and escalating to a top rate of 5% for income above $1 (for all filing statuses), making Mississippi's bracket structure the simplest among progressive states with only two rates.
- Mississippi's progressive brackets are extremely compressed, meaning the first bracket covers only the first $1 of income, so virtually all middle and high earners immediately reach the top 5% rate. For a $1 earner, ~ $1+ of income is taxed at 5%, making the effective rate very close to the flat 5% rate.
- Mississippi does not collect income taxes from cities or counties, ensuring consistent tax calculations regardless of work location. All Mississippi residents have the same income tax structure—only the state progressive brackets apply.
- Mississippi does not impose state income tax on Social Security benefits or retirement distributions (pensions, 401(k) withdrawals, IRA distributions) for residents, making the state attractive for retirees despite the progressive income tax structure. However, property taxes and sales taxes in Mississippi can be significant, offsetting some retirement benefits.
Common Mistakes People Make
Misconception: 'Progressive tax means I'll pay different rates across brackets in Mississippi.' Reality: Mississippi's progressive system is so compressed (only two brackets, with the first covering just $1) that virtually all taxpayers earning above $1-$1 pay the top 5% rate on almost all their income. A $1 earner pays 5% on ~ $1+ of their income, making their effective rate around 4.9%-5%—essentially a flat 5% rate for most taxpayers. The 'progressive' label is technically accurate but practically irrelevant for most earners.
Misconception: 'Mississippi has low taxes because it's a low-income state.' Reality: Mississippi's income tax is effectively a flat 5% for most earners (due to compressed brackets), which is higher than many flat-tax states like Pennsylvania (3.07%), Indiana (3.15%), or North Carolina (4.75%). Additionally, Mississippi's 7% state sales tax (plus local additions in some areas) is among the higher state sales tax rates in the nation Lower-income residents pay a large percentage of income to sales tax, while higher earners pay 5% income tax. The overall tax burden can be significant.
Misconception: 'No local taxes means Mississippi is cheaper than other states.' While Mississippi avoids local income tax complications, the effective 5% income tax rate combined with high sales taxes (7% state rate, one of the highest in the nation) and property taxes can create a significant tax burden. A big spender in Mississippi might pay more in sales tax than they'd pay in income tax in some other states. Factor in all taxes when comparing Mississippi to other states.
One Thing to Know
Mississippi has the simplest bracket structure in the nation—just two brackets covering only $1. This means someone earning $1 pays the same top rate (5%) as someone earning $1, making the 'progressive' label practically meaningless for most taxpayers.
Important Notes
These calculations are estimates based on current tax law. Your actual take-home pay varies based on:
- Pre-tax deductions (401(k), health insurance, HSA, etc.)
- Your W-4 withholding elections
- Additional income or deductions at tax time
- Individual circumstances and tax situations
Tax rates are subject to change. Federal and state tax laws may be updated annually. This is not tax advice. For personalized help, consult a tax professional familiar with Mississippi tax laws.