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On March 27, 2025, Mississippi Governor Tate Reeves signed the “Build Up Mississippi Act,” ushering in the largest tax cut in state history. The law will phase out the state income tax, cut grocery sales tax, and increase gasoline taxes. While proponents argue the tax cuts will stimulate economic growth, critics warn of adverse effects on state revenue and public services, especially for low-income residents. Economists highlight that the wealthiest will benefit disproportionately, while the state’s budget could face significant strain.
The bill’s income tax phase-out is slated for completion by 2030, with gradual cuts and additional triggers beginning in 2031. However, due to a clerical error, future tax cuts may occur much faster than anticipated. Opponents, including national economists, raise concerns over the long-term viability of the tax cuts, particularly in the face of potential federal budget reductions.
The new law also cuts the grocery sales tax from 7% to 5% and introduces a 9-cent gasoline tax hike to fund infrastructure. While the legislation is hailed as a victory for economic freedom, experts warn that it could leave Mississippi struggling to fund essential services.
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