What Mississippi’s Income Tax Elimination Means For Black Residents And Businesses

Reeves labeled the bill as a landmark point in the state's history, calling it a “profound generational change.”

Mississippi’s Republican Gov. Tate Reeves signed the “Build Up Mississippi Act” into law on March 27, eliminating income tax and making it the largest tax cut in the state’s history — but what does that mean for the state’s Black residents and business owners?

Policy analysts say top income earners pay a smaller share of state and local taxes while the bottom portion—80%—of state income earners pay more, according to Mississippi Today. In 2023, 20% of the population, families earning less than $19,300 per year, paid 12.4% of their income in state taxes. Residents who earned between $19,300 and $31,500 paid 10.8% in state taxes.

However, the state’s wealthiest one percent, making more than $362,300 a year, paid 6.9%.

Reeves’ act sets the state’s income tax to 4% by 2027, then decreases it to 3% by 2030. Further cuts projected to start in 2031 will be activated by triggers. Despite several alleged typos in the HB 1 legislation, given the Senate’s plan to eliminate income tax with caution while the House wanted it done faster, Reeves labeled the bill as a landmark point in the state’s history, calling it a “profound generational change.” “Today is a day that will be remembered, not just for the headline, not just for the politics, but for the profound generational change it represents,” Reeves said, according to the Clarion-Ledger.

“I must say, it feels like it’s been a long time coming, but after many, many, many years of hard work, we can all stand together and say that we have accomplished income tax elimination in the state of Mississippi. Let me say that again, Mississippi will no longer tax the work, the earnings, or the ambition of its people.”

For the state’s Black-owned businesses, the cuts will only add to existing struggles of business owners. In 2023, business owner Eric Collins, owner of Herbal Blessings, located in the capital city of Jackson, said conservative cuts only cater to the rich. “The tax cuts are for big businesses and the rich,” Collins said. “As for the support our small businesses get from the state? It’s very little.”

Maati Jone Primm, owner of Marshall’s Music and Bookstore, says taxes enabled by a mostly white Legislature make it harder for Black residents to thrive successfully. “I feel like they are attacking us,” she said. “It’s plantation politics. It’s absolutely awful. You have all these different attacks. It’s almost death by a thousand cuts.”

In addition to scrubbing income tax, the new legislation increases the sales tax on groceries to 7% from 5% and increases the gasoline tax by nine cents over the next three years. The goal is to establish infrastructure funding and implement new hybrid public employee retirement benefits. Reeves called it a “win for families” and hoped Mississippi would be a leader. “I believe with all my heart that we will look back on this day as a turning point, a generational victory and a proud legacy we leave for those who come after us,” he said.

Democrats and analysts, like the Institute on Taxation and Economic Policy’s senior tax analyst Neva Butkus, disagree with the governor’s decision, saying the $1.9 billion cut will harm the state’s economy and leave the legislature struggling with cash due to the need to provide essential government services.