Overview of Mississippi Retirement Tax Friendliness
Mississippi exempts all forms of retirement income from taxation, including Social Security benefits, income from an IRA, income from a 401(k) and any pension income. The state also has relatively low property taxes.
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Mississippi Retirement Taxes
If you are planning your retirement and trying to decide where to settle down, Mississippi may be worth consideration. It has warm winters and an average cost of living that's lower than the national average. It is also one the country’s most tax-friendly states for retirees.
What makes Mississippi’s tax system so great for retirees? First and foremost is the way it treats retirement income. Mississippi exempts all forms of retirement income from taxation, including Social Security benefits, income from an IRA, income from a 401(k) and any pension income. On top of that, the state has low property taxes and moderate sales tax.
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Is Mississippi tax-friendly for retirees?
Mississippi has some of the most generous exemptions for retirement income of any U.S. state. Income sources that are exempt from state taxes include Social Security retirement benefits, pensions, 401(k)s and IRAs.
Additionally, the state has property taxes that rank among the lowest in the country. Mississippi’s sales tax rates are close to average and it has no estate or inheritance tax.
Is Social Security taxable in Mississippi?
Even Social Security income that is taxed at the federal level is exempt from the state tax in Mississippi.
Are other forms of retirement income taxable in Mississippi?
Mississippi provides exemptions for retirees on all of the most common forms of retirement income. Income from pensions, 401(k)s, IRAs, 403(b)s, SEP-IRAs and 457(b)s are all exempt in Mississippi. Work income earned by seniors is, however, subject to the state income tax. For regular income, the state exempts the first $10,000 and then levies a 5% tax on all income above $10,000.
How high are property taxes in Mississippi?
Property taxes in Mississippi are very low. The median annual property tax paid in the state is just $1,052, which ranks as the sixth-lowest amount in the country, including Washington D.C.
One reason why could be that the median home value in the state ($133,000) is less than half the amount of the national median. For seniors, however, housing costs may be even lower than that.
What is the Mississippi homestead exemption for the elderly?
All Mississippi homeowners whose home is their principal residence are eligible for the regular Mississippi homestead exemption. The regular homestead exemption can credit a homeowner for up to $300 in taxes, based on the first $7,500 in home value.
A bonus exemption for the elderly is available only to homeowners over the age of 65. It fully exempts the first $7,500 in home value.
How high are sales taxes in Mississippi?
The state sales tax rate in Mississippi is 7%. This is the rate collected across the state, with one exception. There is an additional 1% tax in Jackson, the state capital.
Mississippi is one of just a few states to apply sales taxes to groceries. However, prescription drugs are exempt from the sales tax in Mississippi.
Does Mississippi have an estate tax?
There is no estate or inheritance tax in Mississippi.
