On Wednesday, Republican Lt. Gov. Delbert Hosemann introduced a comprehensive tax reduction initiative amounting to $326 million. This package aims to lower the state income tax, diminish the sales tax on grocery items, and increase the gasoline tax to support road maintenance initiatives.
In contrast to the House’s more ambitious proposal for tax reform, which seeks to abolish individual income tax over the next ten years, the Senate’s strategy is more conservative. The House’s plan is projected to result in a net tax cut totaling $1.1 billion, while Hosemann’s initiative emphasizes a careful, sustainable approach to future tax reductions.
During a press conference alongside various Republican senators, Hosemann emphasized the need for the tax changes to be sustainable over time. “This needs to be sustainable,” he asserted, suggesting that one-time reductions would not suffice.
Senate leaders described their plan with careful and deliberate terminology, focusing on responsibility and the implications for government spending. Hosemann mentioned that by the end of four years, the individual income tax in Mississippi would be lowered to 2.99%, which would rank as one of the lowest rates among states maintaining an income tax regime.
While legislation for this tax plan has yet to be introduced, it anticipates cutting the current 7% sales tax on groceries down to 5% starting in July 2026. To support municipalities that currently receive a share of the grocery tax revenue, the Senate plan aims to ensure that these localities maintain their usual revenue streams, thereby protecting community finance.
The proposal also includes an incremental increase to the state’s gasoline tax, raising it from the current 18.4 cents per gallon by three cents annually over a three-year span, culminating in a tax of 27.4 cents per gallon. The generated revenue from this gas tax is integral for maintaining existing highway infrastructure and funding new projects. Contrastingly, the House’s proposal includes an additional 5% sales tax atop the current rates, potentially burdening consumers more significantly at the gas pump.
Hosemann’s initiative’s transition of the income tax rate from 4% to 2.99% within the next four years could prompt significant discussions with the House, given the stark differences between the two plans.
This announcement follows the House’s passage of its plan last month, which outlines the elimination of income tax over the next decade while simultaneously reducing the grocery tax and increasing sales and gasoline taxes. House Speaker Jason White, who represents the Republican Party from West, has prioritized the abolition of the income tax this legislative session. He expressed optimism regarding the Senate’s plan by acknowledging the House’s desire for collaboration despite evident disparities in their approaches.
White had previously criticized the Senate for not releasing a detailed tax reform strategy, especially with the legislative session approaching its halfway point. “I’m glad they’re in the ballgame,” he remarked, highlighting the importance of the ongoing discussions between both legislative chambers for the benefit of Mississippi citizens.
Hosemann indicated that the Senate leadership conducted thorough analysis and projections before finalizing their plan to ensure its feasibility. If the final tax cut proposal is approved by the Legislature, it will then be sent to Republican Gov. Tate Reeves for review. While Reeves has been supportive of tax reduction efforts, his response to a proposal that does not fully eliminate the income tax remains uncertain.
