By: CA Staff Writer | Jan 21, 2025
Clarksdale, Mississippi – The Mississippi House of Representatives passed a groundbreaking $1.1 billion tax reform plan on Thursday that aims to phase out the state income tax, cut grocery taxes, and raise sales and gasoline taxes. House Bill 1, authored by Republican Rep. Trey Lamar of Senatobia and other House leaders, passed with an 88-24 bipartisan vote. Only Democratic representatives opposed the measure, with nine Democrats supporting the bill and seven voting “present.”
Key Elements of the Plan
The bill proposes several sweeping changes to the state’s tax structure, including:
- Income Tax Phase-Out:
The income tax rate would drop from 4% to 3% in 2025, with additional annual reductions of 0.3% until the tax is eliminated within 10 years. - Grocery Tax Cuts:
The state’s 7% grocery tax would gradually decrease to 2.5% over the next decade. However, a new 1.5% local sales tax could apply, leaving a net 4% grocery tax once fully enacted. - Sales Tax Increase:
A 1.5% increase in the general sales tax for local governments would raise the state sales tax from 7% to 8.5%. Counties would direct these funds toward road maintenance. - Gasoline Tax Hike:
A new 5% tax on gasoline sales would generate approximately $400 million annually for the Mississippi Department of Transportation (MDOT). This would add about 13 cents per gallon based on the current average gas price of $2.62.
Support and Opposition
House Speaker Jason White praised the bipartisan support for the bill, noting its importance to Mississippi residents. “This is a good, strong vote for us and a solid position to advocate for its advancement in the Senate,” he said.
Proponents argue the plan would spur economic growth and generate sufficient revenue to offset the $1.1 billion cut to the state’s $7 billion general fund without significant reductions in government services. MDOT leaders Willie Simmons and Brad White commended the House for addressing infrastructure funding, although they did not explicitly endorse the bill.
However, critics worry the changes could disproportionately burden lower-income families. House Minority Leader Robert Johnson III of Natchez expressed concerns over potential negative impacts on working-class Mississippians. “This is putting a burden on working people,” he said.
Democratic Rep. Omeria Scott of Laurel attempted to expedite the grocery tax cut with an amendment, but the Republican majority defeated it.
Future Prospects
The bill now moves to the GOP-controlled Senate, where its future is uncertain. While Senate leaders have historically taken a more cautious approach to tax cuts, Lt. Gov. Delbert Hosemann has expressed interest in reducing both grocery and income taxes.
The legislation’s fate also hinges on Governor Tate Reeves, whose position remains unclear. Although Reeves has supported tax cuts in the past, he has opposed “tax swaps” that simultaneously raise taxes in other areas.
If passed, this legislation could mark one of the most significant tax overhauls in Mississippi’s history, reshaping the state’s fiscal landscape for years to come.
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