Mississippi Lt. Gov. Hosemann unveils $326 million ‘sustainable, cautious’ tax cut plan
Republican Lt. Gov. Delbert Hosemann on Wednesday unveiled a $326 million tax cut package that reduces the state income tax and the sales tax on groceries and raises the gasoline tax to fund road work.
The plan is more austere than the overhaul the House has proposed. That plan would eliminate the individual income tax in Mississippi over the next decade, raise sales taxes and create a new indexed gasoline tax. The House plan would be a net tax cut of $1.1 billion.
Flanked by Republican senators, Hosemann said the Senate plan would cut taxes over the next four years while allowing the Legislature to spend tax dollars on core government functions such as public education.
“This needs to be sustainable,” Hosemann said. “A conservative approach to tax reform. Now, just to do things for one year doesn’t mean it’s sustainable. This needs to be sustainable.”
Senate leaders at a Wednesday press conference with Hosemann used the terms “measured, careful, cautious and responsible” when explaining details of the Senate plan.
Hosemann said the Senate plan would within four years reduce Mississippi’s individual income tax to 2.99%, one of the lowest rates in the nation of states that collect income taxes.
Legislation for the plan has not yet been filed, but if passed, the proposal would reduce the state’s 7% sales tax on grocery items to 5% in July 2026.
Municipalities currently receive a portion of the state tax collected from grocery sales. Hosemann said the Senate plan would make municipalities whole and allow them to collect the revenue they would typically receive from the state.
The plan also raises the state’s 18.4-cents-a-gallon gasoline excise by three cents each year over the next three years, eventually resulting in a 27.4 cents per gallon gas tax at completion. The gas tax funds highway infrastructure maintenance and new infrastructure projects. The House plan would create a new 5% sales tax on top of the current excise, which at current rates would cost consumers more at the pump than the Senate plan.
Hosemann’s plan reduces the state’s flat 4% income tax to 2.99% over four years, a component that’s likely to set up a major debate with the House.
The announcement comes after the House passed a plan last month that eliminates the income tax over a decade, cuts the state grocery tax and raises sales taxes and gasoline taxes.
House Speaker Jason White, a Republican from West, has made income tax elimination his top priority this legislative session. He told reporters that even though there were a lot of differences between the House and Senate tax plans, he applauded the Senate for introducing a tax cut plan to allow the two chambers to potentially negotiate a final proposal.
Last week, White had criticized Hosemann and the Senate for not having presented a detailed plan, and legislation, with the three-month legislative session nearing the midway point.
“I’m glad they’re in the ballgame,” White said of the Senate plan Wednesday. “They’re in the ballgame, so we’ve got a chance. Mississippians have a chance at a tax cut if the Senate’s in the game, so that’s a positive.”
Hosemann said he and his Senate leadership “took our time, to run proformas and make sure this works the way we intend it.”
If the Legislature passes a final tax cut plan, it will head to Republican Gov. Tate Reeves’ desk for consideration. Reeves has encouraged lawmakers to pass legislation to eliminate the income tax, but it remains unclear if he would sign a tax cut package into law that does not fully eliminate the income tax.
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This story was originally published by Mississippi Today and distributed through a partnership with The Associated Press.