Senate Bill 2960

AN ACT TO AMEND SECTION 27-7-5, MISSISSIPPI CODE OF 1972, TO ADJUST THE INCOME TAX RATES FOR NATURAL PERSONS; TO PROVIDE THAT, FROM AND AFTER JANUARY 1, 2022, NO TAX SHALL BE LEVIED, AUTHORIZED OR OTHERWISE PERMITTED UPON THE FIRST $10,000.00 OF WAGES OR PERSONAL INCOME OF NATURAL PERSONS; TO SET THE TAX RATE ON ALL WAGES OR PERSONAL INCOME OF NATURAL PERSONS IN EXCESS OF $10,000.00 AT 4.5%, TO DECREASE BY .50% EACH YEAR THEREAFTER UNTIL THE TAX RATE IS 0%; TO PROVIDE THAT, FROM AND AFTER JANUARY 1, 2031, NO TAX SHALL BE LEVIED, AUTHORIZED OR OTHERWISE PERMITTED UPON THE WAGES OR PERSONAL INCOME OF NATURAL PERSONS, NOR SHALL ANY STATE OR LOCAL TAX MEASURED BY PAYROLL, WAGES OR PERSONAL INCOME BE LEVIED, AUTHORIZED OR OTHERWISE PERMITTED; TO SPECIFY THAT THESE ADJUSTMENTS SHALL NOT BE CONSTRUED AS PROHIBITING ANY OTHER TAXING AUTHORITY SET FORTH IN THE CONSTITUTION AND IN EFFECT ON JULY 1, 2021, OR ADJUSTMENT OF THE RATE OF SUCH TAX; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 27-7-5, Mississippi Code of 1972, is amended as follows:

27-7-5. (1) There is hereby assessed and levied, to be collected and paid as hereinafter provided, for the calendar year 1983 and fiscal years ending during the calendar year 1983 and all taxable years thereafter, upon the entire net income of every resident individual, corporation, association, trust or estate, in excess of the credits provided, a tax at the following rates:

(a) (i) Through calendar year 2017, on the first Five Thousand Dollars ($5,000.00) of taxable income, or any part thereof, the rate shall be three percent (3%);

(ii) For calendar year 2018, on the first One Thousand Dollars ($1,000.00) of taxable income there shall be no tax levied, and on the next Four Thousand Dollars ($4,000.00) of taxable income, or any part thereof, the rate shall be three percent (3%);

(iii) For calendar year 2019, on the first Two Thousand Dollars ($2,000.00) of taxable income there shall be no tax levied, and on the next Three Thousand Dollars ($3,000.00) of taxable income, or any part thereof, the rate shall be three percent (3%);

(iv) For calendar year 2020, on the first Three Thousand Dollars ($3,000.00) of taxable income there shall be no tax levied, and on the next Two Thousand Dollars ($2,000.00) of taxable income, or any part thereof, the rate shall be three percent (3%);

(v) For calendar year 2021, on the first Four Thousand Dollars ($4,000.00) of taxable income there shall be no tax levied, and on the next One Thousand Dollars ($1,000.00) of taxable income, or any part thereof, the rate shall be three percent (3%);

(vi) For calendar year 2022 and all taxable years thereafter, there shall be no tax levied on the first Five Thousand Dollars ($5,000.00) of taxable income;

(b) Except as otherwise provided in paragraph (d) of this subsection, on taxable income in excess of Five Thousand Dollars ($5,000.00) up to and including Ten Thousand Dollars ($10,000.00), or any part thereof, the rate shall be four percent (4%); and

(c) Except as otherwise provided in paragraph (d) of this subsection, on all taxable income in excess of Ten Thousand Dollars ($10,000.00), the rate shall be five percent (5%).

(d) (i) From and after January 1, 2022, no tax shall be levied, authorized or otherwise permitted upon the first Ten Thousand Dollars ($10,000.00) of wages or personal income of natural persons. For all wages or personal income of natural persons in excess of Ten Thousand Dollars ($10,000.00), the rate shall be four and one-half percent (4.5%). The taxable rate on all wages or personal income of natural persons in excess of Ten Thousand Dollars ($10,000.00) shall decrease by one-half percent (.50%) each year thereafter until the taxable rate is zero percent (0%).

(ii) From and after January 1, 2031, no tax shall be levied, authorized or otherwise permitted upon the wages or personal income of natural persons, nor shall any state or local tax measured by payroll, wages or personal income be levied, authorized or otherwise permitted; however, nothing contained herein shall be construed as prohibiting any other taxing authority set forth in the Constitution and in effect on July 1, 2021, or adjustment of the rate of such tax.

(2) An S corporation, as defined in Section 27-8-3(1)(g), shall not be subject to the income tax imposed under this section.

(3) A like tax is hereby imposed to be assessed, collected and paid annually, except as hereinafter provided, at the rate specified in this section and as hereinafter provided, upon and with respect to the entire net income, from all property owned or sold, and from every business, trade or occupation carried on in this state by individuals, corporations, partnerships, trusts or estates, not residents of the State of Mississippi.

(4) In the case of taxpayers having a fiscal year beginning in a calendar year with a rate in effect that is different than the rate in effect for the next calendar year and ending in the next calendar year, the tax due for that taxable year shall be determined by:

(a) Computing for the full fiscal year the amount of tax that would be due under the rates in effect for the calendar year in which the fiscal year begins; and

(b) Computing for the full fiscal year the amount of tax that would be due under the rates in effect for the calendar year in which the fiscal year ends; and

(c) Applying to the tax computed under paragraph (a) the ratio which the number of months falling within the earlier calendar year bears to the total number of months in the fiscal year; and

(d) Applying to the tax computed under paragraph (b) the ratio which the number of months falling within the later calendar year bears to the total number of months within the fiscal year; and

(e) Adding to the tax determined under paragraph (c) the tax determined under paragraph (d) the sum of which shall be the amount of tax due for the fiscal year.

SECTION 2. This act shall take effect and be in force from and after July 1, 2021.