Overview of Mississippi Taxes
Overall, Mississippi has a relatively low tax burden. Its income tax system has a top rate of just 5.00%. Income taxes are also progressive, which means higher-earning filers will pay more in taxes. There are no city or local income taxes in Mississippi.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Mississippi Paycheck Calculator
Mississippi Paycheck Quick Facts
- Mississippi income tax rate: 0% - 5%
- Median household income: $43,567 (U.S. Census Bureau)
- Number of cities that have local income taxes: 0
How Your Mississippi Paycheck Works
No matter which state you work in, you need to pay FICA taxes. FICA taxes are made up of Social Security and Medicare taxes. Your employer withholds 6.2% of your wages for Social Security and 1.45% for Medicare from your paycheck. Your employer also matches those amounts so the total contributions are doubled. If you are self-employed, you have to pay the total 12.4% to Social Security and 2.9% to Medicare yourself (though you can then deduct half of those self-employment taxes). Any wages you earn in excess of $200,000, are subject to a 0.9% Medicare surtax, which employers do not match.
Money is also withheld from your paycheck for federal income tax. Instead of paying your taxes in one lump sum in April, you pay installments throughout the year. How much your employer withholds will depend on your earnings and what you put on your W-4 form. The W-4 form that you give your employer indicates things like your marital status and any additional tax withholding you want your employer to take from your paychecks.
Take note that withholding calculations changed for the 2018 tax year because of the tax plan that President Trump signed into law in December 2017. If you haven’t made it a habit to check your W-4, look over your form just to ensure the information is still accurate. If your W-4 is correct, you don’t need to do anything.
You should also note, however, that the 2020 Form W-4 comes with many revisions. The new W-4 no longer uses allowances, additionally removing the option to claim personal or dependency exemptions. Instead, it includes a five-step process that lets filers enter personal information, claim dependents and indicate any additional jobs or income. The form also asks filers to enter annual dollar amounts for income tax credits, non-wage income, itemized and other deductions and total annual taxable wages. In 2020, these changes mainly affect those adjusting their withholdings or shifting jobs. Employees hired before 2020 aren’t required to complete the updated form, but anyone brought on during 2020 needs to fill it out.
Other money deducted from your paycheck depends on whether you opt to take advantage of benefits offered by your employer. If you have health or life insurance plans through your company, money to pay those premiums will come out of your paycheck. These payments are usually pre-tax, which means they are deducted before taxes are removed. This lowers the amount of money you actually have to pay taxes on. Some other pre-tax accounts that you may opt into include retirement accounts, like a 401(k) or 403(b) and medical expense accounts, such as a health savings account (HSA) or flexible spending account (FSA).
Mississippi Median Household Income
|Year||Median Household Income|
The Magnolia State’s tax system is progressive, so taxpayers who earn more can expect to pay higher marginal rates of their income. You will be taxed 3% on any earnings between $1,001 and $5,000, 4% on the next $5,000 (up to $10,000) and 5% on income over $10,000. Income below $1,000 is not taxed at the state level. The tax brackets are the same for everyone, regardless of filing status.
No cities in Mississippi charge local income taxes.
Income Tax Brackets
|Mississippi Taxable Income||Rate|
|$0 - $1,000||0%|
|$1,001 - $5,000||3%|
|$5,001 - $10,000||4%|
A financial advisor in Mississippi can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.
How You Can Affect Your Mississippi Paycheck
If you want to adjust the size of your Mississippi paycheck, you should start by looking at your W-4 form. Remember your W-4 is what employers use to determine how much should be withheld in taxes from each of your paychecks.
If you are concerned that you’ll face a big tax bill come April, one option for decreasing it is to elect to have your employer withhold an additional dollar amount from each of your paychecks. Simply decide how much you want withheld - for example, $20 per paycheck - and write that amount down on a new W-4. Our paycheck calculator will help you determine how much more you should withhold.
You can also save for retirement while reducing your taxable income by putting more money into pre-tax retirement accounts like a 401(k) or 403(b). Typically, 401(k) funds are not taxed until you withdraw money from the plan. But since Mississippi does not require retirees to pay state income tax on qualified income, the money in your 401(k) is never subject to state-level taxes if you retire in the state.
If you are thinking about a move to Mississippi and will be looking to purchase a home, our Mississippi mortgage guide can help ease some of the stress that comes with homebuying. It puts all the important information about rates and getting a mortgage in the Magnolia State onto one convenient page.
Mississippi Top Income Tax Rate
|Year||Top Income Tax Rate|
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2017 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics