Mississippi’s key legislative figures presented their tax reform plans and potential initiatives to broaden Medicaid coverage for low-income workers on Monday, setting the stage for significant discussions during the upcoming 2025 legislative session at the Capitol. These issues are expected to dominate the legislative agenda for the next three months.
Republican Lt. Gov. Delbert Hosemann outlined his intention to propose a tax reduction plan in the Senate, focusing on decreasing the income tax and grocery tax. House Speaker Jason White, on the other hand, advocates for the complete elimination of the income tax and a significant cut to the grocery tax.
During a press forum at the Stennis Capitol, Hosemann suggested lowering the state’s 7% grocery tax to 5% and reducing the 4% income tax to 3% over the next four years. Currently, Mississippi is in the process of implementing a substantial income tax reduction that was agreed upon after heated discussions in 2022. By 2026, the state is expected to have a flat income tax rate of 4% for earnings surpassing $10,000, which is among the lowest in the country. Subsequently, Hosemann’s proposal aims to further decrease the income tax by 0.25% over the next four years, targeting a flat rate of 3% by 2030.
Hosemann remarked, “Continuing our income tax elimination is feasible over time, allowing us to maintain funding for our transportation and education systems.” Meanwhile, White, a Republican from West, expressed his desire to phase out the income tax in a timeframe of 8 to 10 years, with intentions to reduce the grocery tax from 7% to 3.5% over the years ahead. He emphasized, “I believe it all needs to go, and legislation will come from the House to facilitate this process in an orderly manner.”
White noted that anticipated state economic growth, averaging between 2% to 3% annually, would help absorb the fiscal impact of these tax cuts and the eventual elimination of the income tax. Mississippi currently imposes the highest grocery tax in the nation at 7%, which is collected alongside other sales taxes, with 18.5% of it returned to local governments, forming a significant revenue stream for many municipalities. Both Hosemann and White indicated that their grocery tax reduction measures would ensure cities remain financially secure, proposing that local governments could be permitted to impose additional sales taxes to compensate.
In addition, White’s tax strategy includes ensuring the Mississippi Department of Transportation has a steady revenue source for road infrastructure projects, which may involve increasing the state’s 18.4% gasoline tax—also one of the lowest rates nationwide. Any proposed tax cut would ultimately require the approval of Republican Gov. Tate Reeves, who has expressed a clear preference for the elimination of the income tax while generally supporting tax reduction measures that do not involve raising other taxes.
On the topic of Medicaid expansion, both White and Hosemann acknowledged that discussions may be deferred as legislative leaders await insights from a new Centers for Medicare and Medicaid Services (CMS) under the Trump administration regarding potential changes, including the possibility of work requirements for Medicaid beneficiaries. “We’re going to hold back and assess the Trump administration’s position on these issues,” White mentioned, asserting that a cautious approach is necessary.
Both leaders have echoed their views that Medicaid expansion discussions will only progress if they align with a work requirement. Hosemann remarked on his communication with CMS regarding the work requirement, suggesting that its approval would hinge on the future CMS administrator—an appointment expected to be filled by Dr. Mehmet Oz, a well-known television personality, under the incoming administration.
White asserted that despite our political landscape, his cohort would pursue expansion without a definite plan from Congress or the new administration to curtail the program. As legislative conversations with CMS continue, Hosemann anticipates introducing a preliminary “dummy bill” designed solely to facilitate discussions on Medicaid expansion without committing to specific details.
Ultimately, both House and Senate aim to develop a compromise Medicaid expansion proposal similar to a previous initiative that would extend coverage to individuals earning around $20,000, contingent upon federal approval for work requirements.
Opponents of such requirements, notably including legislative Democrats, express concern that imposing verification processes would further burden low-income individuals already navigating considerable challenges. With Gov. Tate Reeves opposing expansion, achieving a veto-proof majority may necessitate cooperation with minority party members in the upcoming legislative session.
Meanwhile, Hosemann declared plans to advocate for legislation addressing educational challenges such as chronic absenteeism in public schools, enhancing the sustainability of the Public Employees Retirement System, and establishing last-dollar tuition programs for community colleges.
Alongside this, White highlighted his intention to support measures that reform certificate of need laws for medical facilities, enhance transparency regarding pharmacy benefit managers, restore voting rights for individuals with prior nonviolent felony convictions, reinstate the initiative process, legalize mobile sports betting, and expand education savings accounts for students in poorly-rated school districts, allowing funding for private education and other approved expenses.
These proposals signal an ambitious agenda for Mississippi lawmakers as they gear up for a potentially transformative session.
