Weekly Legislative Update: 2.24.25
Tax and Revenue Bills Take Center Stage
Legislative Update: Tax and Revenue Bills Take Center Stage
Lawmakers in both chambers took initial steps in starting to write the state’s budget, passing bare-bones funding bills through both chambers. The House and Senate budget writers, as is common, introduced and passed the 100-plus bills making up the state’s budget with spending amounts at the pre-session Joint Legislative Budget Committee Recommendation released in December. The starting-point plan actually reduces spending in several state agencies, and budget writers in late March will make final decisions on increased funding.
Meanwhile, the Senate Finance Committee adopted and sent to the full Senate legislation that would enact the tax-reduction proposal unveiled last week by Lt. Gov. Delbert Hosemann. The House unveiled their plan in early January. While both plans reduce taxes, meaningful differences remain, as outlined below.
Comparison of the Mississippi House and Senate Tax Plans
Mississippi lawmakers are currently considering two different tax reform proposals, House Bill 1 known as the “Build Up Mississippi Act,” and Senate Bill 3095. While both plans aim to adjust the state’s tax structure, they take distinct approaches in balancing tax cuts with new revenue measures. Below is a comparative summary of the key provisions in each plan.
Income Tax Reform
| House Plan (HB1): Phases out the state’s individual income tax completely over a ten-year period, with incremental reductions beginning in 2027 until reaching 0% in 2037. | Senate Plan (SB 3095): Reduces the income tax rate in stages, dropping to 3.75% in 2027, 3.5% in 2028, 3.25% in 2029, and 2.99% in 2030. Further reductions would be considered by the Legislature but are not guaranteed. |
Grocery Sales Tax Reduction
| House Plan: Reduces the grocery sales tax from 7% to 6% in 2026, then gradually phases it down to 4% over ten years | Senate Plan: Cuts the grocery sales tax from 7% to 5% starting in July 2025. |
General Sales Tax and Local Tax Adjustments
| House Plan: Increases the sales tax on non-grocery items from 7% to 8.5% to offset lost income tax revenue. Ends the 18.5% sales tax diversion to municipalities but allows a new 1.5% local sales tax on non-grocery items, which local governments can opt out of. | Senate Plan: Does not increase the general sales tax rate. Instead, it eliminates the grocery tax from the municipal special sales tax. |
Fuel Taxes and Infrastructure Funding
| House Plan: Implements a new 5% sales tax on fuel on top of the existing 18.4 cents per gallon tax, with the estimated additional $400 million in annual proceeds dedicated to the Mississippi Department of Transportation (MDOT). Moreover, the House package devotes an estimated $80 million in locally collected sales taxes toward a local road projects. | Senate Plan: Increases the per-gallon fuel excise tax in three phases—rising from 18 cents to 21 cents in FY 2026, 24 cents in FY 2027, and 27 cents in FY 2028. Beginning in 2029, the rate would be adjusted biennially based on inflation, capped at a maximum of 1 cent per gallon increase every two years. Senate leaders estimate it will provide an additional $212 million annually when implemented. |
Use of Lottery Revenue
| House Plan: Redirects the first $100 million of Mississippi Lottery Corporation proceeds to the Public Employees’ Retirement System (PERS), with any excess split between the Education Enhancement Fund and the Multi-Modal Transportation Improvement Fund. | Senate Plan: Does not include changes to how lottery proceeds are allocated. |
Impact on Local Governments
| House Plan: Ends the 18.5% sales tax diversion to municipalities but replaces it with a 1.5% local sales tax. Counties also receive new revenue from sales tax collections in unincorporated areas. | Senate Plan: Maintains most existing sales tax diversions but removes the grocery tax component from municipal sales tax collections. |
In Summary: The House plan takes a more aggressive approach to tax elimination, aiming to phase out the income tax entirely while shifting more revenue reliance onto sales and fuel taxes. While reducing the income tax, the Senate plan retains a more gradual approach and incorporates a structured fuel excise tax increase rather than a new sales tax on fuel. The House plan also shifts local government revenue sources by ending the sales tax diversion but allowing local sales tax additions.
While both plans seek to reduce the tax burden on Mississippians, the differences in approach, particularly in income tax elimination, grocery and general sales tax changes, and fuel taxation, will likely be central to legislative negotiations.
In Other Legislative News:
Mississippi Legislature Sends Wine Shipping Bill to Governor’s Desk
After years of debate, Mississippi lawmakers have passed a bill that would allow direct shipments of wine to residents’ homes, sending it to Governor Tate Reeves for final approval. The legislation, Senate Bill 2145, would permit individuals to receive up to 12 cases of specialty wine per year, specifically those not available in local package stores. A 15.5% tax would apply to these shipments. The bill passed the House by a vote of 80-29, marking a significant step toward modernizing the state’s alcohol laws.
Mississippi Senate Votes to Ban Sweepstakes Casinos
The Mississippi Senate has unanimously approved a bill to ban sweepstakes casinos, a form of online gambling that many residents may not realize is illegal. The legislation, Senate Bill 2510, imposes strict penalties on operators, including hefty fines and potential prison time, but does not penalize individual users. Supporters argue that these platforms, which allow users to exchange virtual tokens for real money, operate outside of state gaming regulations and compete unfairly with licensed casinos. The Mississippi Gaming Commission has previously attempted to shut down offshore operators, but enforcement has been challenging. Mississippi joins several other states in seeking to regulate or ban these online gambling platforms.
News Around the State:
ROCKWOOL Expands in Mississippi with $100 Million Investment
ROCKWOOL, a global insulation manufacturer, is expanding its Marshall County facility with a $100 million investment to add a new production line. The expansion will enhance the company’s ability to meet growing demand in the southern U.S. while creating approximately 30 new jobs in the area. Governor Tate Reeves praised the move, calling it a major win for the region, stating, “This economic development project is a huge win for Marshall County. It will have positive impacts throughout the county and region, and it will further strengthen the local tax base by creating dozens of great new job opportunities for workers in the region.” The company, which has operated in Marshall County since 2014, says the investment reaffirms its commitment to Mississippi. The new production line is expected to be operational by 2027.
Mississippi’s Graduation Rate Remains Strong, Continues to Outpace National Average
The Mississippi Department of Education announced the state’s latest graduation rate at 89.2% and a dropout rate of 8.5% for the 2023-24 school year. While the overall graduation rate remains strong, it has slightly decreased by 0.2 percentage points from the previous year, while the dropout rate remained steady. Among students with disabilities, however, the graduation rate dropped by nearly five points, and the dropout rate increased. Officials noted that waivers granted during the COVID-19 pandemic had previously helped boost graduation numbers, but their expiration may now be contributing to the shift. Despite the slight decline, Mississippi’s graduation rate continues to surpass the national average, reflecting ongoing progress in the state’s education system.
Downtown Jackson: Major Investment Brings Fresh Energy
Downtown Jackson is getting a major boost with the purchase of the Pinnacle Building and the historic Deposit Guaranty Building by New Jersey developer Kumar Bhavanasi. With nearly 500,000 square feet of property under his ownership, Bhavanasi is determined to revitalize the area by attracting new businesses and tenants. Plans are already in motion for a coffee shop, restaurant, and even a small pharmacy to improve downtown’s livability. The Deposit Guaranty Building will be transformed into a mix of luxury apartments and a top-tier hotel featuring a rooftop restaurant and bar. With the support of city and state officials, Bhavanasi sees Jackson’s downtown as a prime investment opportunity. His vision is clear, bring people back, reinvigorate the community, and restore the city’s once thriving business district.
DeSoto County’s Agri Education Center Brings New Opportunities for Recreation and Learning
DeSoto County’s highly anticipated Agri Education Center is nearing completion, promising a mix of recreation, education, and community events. Set on a 200-acre site that was once a landfill, the center will feature a 2,000-capacity arena for rodeos, horse shows, and livestock exhibitions, as well as miles of walking trails, a fishing pond, and sports facilities. The center will also offer hands-on classes in cooking, gardening, and archery, bringing back skills from past generations. A strong focus on youth engagement through 4 H programs and school field trips aim to make this a community staple. Future phases will expand sports offerings and add additional stables to accommodate high demand equestrian events. Whether for a rodeo, a cross-country race, or a relaxing day outdoors, the Agri Education Center is set to become a go-to destination.
Hyatt Announces New Lodge at Okhissa Lake
A major tourism boost is coming to rural southwest Mississippi with the development of a luxury lodge and conference center at Okhissa Lake, led by Destination by Hyatt and the Scenic Rivers Development Alliance. Set to open in 2027, the 200-room lodge will include high end amenities such as a spa, upscale dining, and a boardwalk overlooking a marina. The project is the result of years of work by United States Senator Cindy Hyde Smith, who has been focused on bringing economic growth to the region. Nestled in the Homochitto National Forest, Okhissa Lake offers a pristine setting for outdoor enthusiasts, with its deep waters and scenic trails. The development is expected to bring jobs, tourism, and new opportunities to Franklin County. With Hyatt’s reputation for creating immersive experiences, this lodge could become one of Mississippi’s premier travel destinations.
Next Deadline: Money bills Lawmakers this week will continue the state’s budget work and discussing tax and bond issues as they face a Feb. 26 deadline to adopt the first versions of appropriations and revenue bills. Full deadline calendar can be found here
