Tax reform bill passes, heads to Reeves for signature
Mississippi House members Friday voted to go with the Senate language and passed House Bill 1 (HB1), which phases out the state income tax and reduces the grocery tax, while at the same time increasing the gasoline tax in the state. House members had approved the bill on Thursday but also voted to reconsider the bill. Friday morning, the House moved to table the reconsideration and accepted the Senate language.
The move to table the reconsideration came on a voice vote in the House chambers in Jackson Friday morning.
It means Mississippi will become the first state to see a reduction to elimination of an existing state income tax. The grocery tax will be reduced from seven percent to five percent. However, drivers in Mississippi will see an increase in the state gasoline tax of nine cents, phased in over three years.
It does add what is called a Tier 5 in the state’s Public Employees Retirement System for new hires, which retired educators expressed concern about at a meeting of the DeSoto County Retired Education Personnel Association near Hernando Thursday night.
“If the Tier 5 goes in you will not be able to hire good teachers,” said retired DeSoto County Schools Supt. Milton Kuykendall. “Tier 5 will kill employees because we can’t hire them and we can’t keep them.”
In a post on his Facebook page Thursday after the vote, state Sen. Dr. David Parker (R-Olive Branch) explained the Tier 5 provisions.
- • The State PERS plan will add a new tier 5 for new hires beginning in March 2026
- • The new tier with be a hybrid 401(k) and defined benefit plan
- • There will be no COLA (Cost of living Adjustment with this new tier)
Parker noted in his post he did not support the Tier 5 provision and did not support the gas tax increase. He did back the income tax reduction and the grocery tax reduction, but because of the opposition to the two areas, he joined state Sen. Kevin Blackwell (R-Southaven) and state Sen. John Polk (R-Hattiesburg) in voting “Present” when it passed the Senate. State Sen. Michael McLendon (R-Hernando) voted against the final Senate bill.
After Friday’s move to table reconsideration, state Rep. Dan Eubanks (R-Walls) also took to social media to explain the provisions of the bill. Eubanks made a point to say the Tier 5 portion will not affect current public employees and that the PERS system will be fully funded by 2064 with the fifth tier.
“If we were to stay with Tier 4 for new hires, PERS will be $20 billion underfunded by 2075,” Eubanks said. “There has been NO change to PERS for all of those currently in the system. YOU WILL be taken care of and YOU WILL continue to get your retirement ‘as promised.’”
Of DeSoto County state representatives, state Rep. Hester Jackson-McCray (D-Horn Lake) voted no.
Governor Tate Reeves indicated on X (formerly Twitter) that he would sign the bill when it reaches his desk.
This is a developing story to be updated when more reaction/comments become available.
