State income tax: 3% (on less than $5,000 of taxable income) — 5% (on more than $10,000 of taxable income). Beginning in 2018, income tax rates will be gradually reduced. By 2022, the first $5,000 of taxable income will be exempt.
Effective income tax rate: 4.6%/individual, 4.9%/joint
Average state and local sales tax: 7.07%
Gas taxes and fees: 19 cents per gallon
Mississippi’s income tax rate kicks in early, resulting in an average effective tax rate of 4.6% for single filers and 4.9% for married filers. Beginning in 2018, however, income tax rates will gradually be reduced. By 2022, the first $5,000 of taxable income will be exempt.
Gas is taxed at 19 cents per gallon, the second-lowest rate in the U.S. Vehicle sales are taxed at 5%, two percentage points below the general sales tax rate. (Mississippi also charges an annual personal property tax based on vehicles’ age and value. Rates are set at the county level. In Lafayette County, for example, you’d pay $285 on a vehicle valued at $20,000.)
The property tax on the Magnolia State’s median home value of $103,100 is $813, the 15th-lowest in the nation.
Mississippi’s state sales tax rate of 7% is the second-highest in the U.S. (only California, at 8.25%, is higher), and Mississippi is one of a minority of states that charges sales tax on groceries. But prescription drugs, residential utilities, motor fuel and newspapers are all exempt, and localities add very little on top of the state’s rate, if anything.
SEE ALSO: The Seven Deadly Taxpayer Sins
Source: Kiplinger
The 10 Most Tax-Friendly States in the U.S.
