JACKSON, Miss. (WLBT) – Days after Gov. Tate Reeves challenged Mississippi lawmakers to eliminate the income tax in 2025, a bill has been filed to make that challenge a reality.

On Friday, representatives submitted H.B. 1, a measure that will completely overhaul the state’s tax system.

In addition to doing away with the income tax, the bill would slowly phase out much of the state’s grocery tax, and mandate local governments to implement a sales tax on other transactions within their corporate boundaries.

House Speaker Jason White touted the measure on social media, saying it was the House’s number one priority.

“We will build up Mississippi by eliminating the income tax to further our state’s competitive advantage and award our workforce… We will build up Mississippi by cutting the grocery tax in half to boost the pocketbook of Mississippians. We will build up Mississippi by developing a dedicated source of revenue for our critical infrastructure with maintenance and capacity projects. We will build up Mississippi by securing and stabilizing our state employee retirement plan,” he said. “House Bill 1 is priority #1.”

Under provisions, the state income tax gradually phased out through 2037, beginning with the first decrease in the tax rate in 2024. Those annual decreases are shown below:

• 2024 – 4.7 percent
• 2025 – 4.4 percent
• 2026 – 4 percent
• 2027 – 3 percent
• 2028 – 2.7 percent
• 2029 – 2.4 percent
• 2030 – 2.1 percent
• 2031 – 1.8 percent
• 2032 – 1.5 percent
• 2033 – 1.2 percent
• 2034 – 0.9 percent
• 2035 – 0.6 percent
• 2036 – 0.3 percent
• 2037 – 0 percent

Meanwhile, the grocery tax will also be reduced, beginning in 2026, when it is reduced to 4.5 percent until it gets down to 2.5 percent in 2036.

Sales tax on the gross proceeds of motor fuels not currently exempt under state statute will be taxed at a rate of 5 percent.

To help make up for the loss of revenue associated with the decrease in the grocery sales taxes, cities, and counties will be given the ability to impose an additional 1.5 percent tax on other sales in their corporate limits.

According to the measure, that additional tax shall be put in place after July 1, 2026. For cities, the tax can be “derived from any of the activities within the municipality which are taxed at the rate of 7 percent,” and would have to be voted in by their respective boards of aldermen or city councils.

Boards of Supervisors also will be required to impose the same tax. Provisions in the bill state that counties can opt out of the tax, but doing so would prevent them from receiving any assistance from the State Aid Road Fund.

Also beginning in 2026, proceeds from the State Lottery will be reallocated, with $100 million set to help shore up the Public Employees’ Retirement System. Any amount over that $100 million will be split equally between early childhood education, and the state’s Multi-Modal Transportation Improvement Fund.

The measure has been referred to the House Ways and Means Committee. It was authored by White, along with Reps. Trey Lamar, Jody Steverson, and Scott Bounds.

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