Senate passes $538 million tax-cut package, lowers grocery and income taxes, raises gas tax

The Mississippi Senate on a final roll call approved a tax package that cuts the state grocery tax from 7% to 5% effective July 1, 2025, phases the top individual income tax rate down from the scheduled 4% to 2.99% over several years, and raises the gasoline excise tax by 3¢ per year for three years, the bill’s sponsor said.

Senator Harkins, who presented the measure as the chamber debated Senate Bill 3095, said the combination of reductions and offsets produces a $127 million immediate reduction from the grocery-tax cut and a total of about $538 million in tax cuts when measured against the previous structure. “We take the income tax from 4 to 2.99. We lower the grocery tax immediately from 7 to 5. And we raise 3¢ a year for the first 3 years on the gas tax for a continued source of funding for maintenance for MDOT and state aid road,” Harkins said during his explanation to colleagues.

Why it matters: the package’s revenue shifts fund transportation needs while returning money to taxpayers. The bill directs the portion of excise revenue above 18¢ per gallon to be apportioned with 23.25% to the Office of State Aid Road Construction, 2.75% to the Strategic Multimodal Investment Fund and 74% to the Mississippi Department of Transportation (MDOT). The sponsor said the gas-tax increases are intended to…