Does Mississippi Tax Social Security and Retirement Income?

Mississippi does not tax Social Security

Mississippi does not tax benefits received from U.S. Social Security or Railroad Retirement. The Department of Revenue states that any portion taxed under federal law is not subject to Mississippi income tax, with no income limit or age condition. Because the benefits are not taxed, deductions related to them, such as Medicare tax withheld, are not allowed either. (Mississippi Department of Revenue: Individual Income Tax Frequently Asked Questions)

The return works differently from most states. Form 80-105 does not begin with federal adjusted gross income; income is listed item by item on page 2, and the instructions say not to report Social Security, Railroad Retirement or retirement income at all. In our three example households, $25,500, $46,750 and $59,500 of federally taxed benefits never reach the Mississippi return. (Mississippi Department of Revenue, Form 80-100: Resident, Non-Resident and Part-Year Resident Individual Income Tax Instructions (2025))

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

Private, government and military pensions are exempt

Amounts received as retirement allowances, pensions or annuities from any federal, state or private retirement system or plan are exempt from Mississippi income tax. The regulation makes no distinction by employer, by state or by amount, so a corporate pension, a pension from another state’s public system and a federal civilian or military pension are treated alike. The exemption passes to a spouse or other beneficiary on the death of the retiree. (Mississippi Administrative Code, Title 35, Part III, Income and Franchise Tax: Subpart 2, Chapter 07 (retirement income) and Subpart 7 (residents and part-year residents))

Some payments that look like pensions are outside the exemption. Separation pay is not retirement income. Deferred compensation received before the recipient has reached the plan’s retirement age or service requirement is taxable, and so are pensions and annuities that are taxable as early or excess distributions under the federal code. Those amounts go on Form 80-105, line 46. (Mississippi Department of Revenue, Form 80-100: Resident, Non-Resident and Part-Year Resident Individual Income Tax Instructions (2025))

IRA and 401(k) withdrawals are exempt once they are no longer early distributions

The exemption for “optional retirement allowances” covers all income from Keogh plans, individual retirement accounts and other similar tax-deferred plans. Deferred compensation plans qualify to the extent they are tax-deferred under federal law and the recipient is qualified to receive other retirement income by age, years of service or other criteria when it is paid. Early distributions do not qualify, though Mississippi adds no early withdrawal penalty of its own. (Mississippi Administrative Code, Title 35, Part III, Income and Franchise Tax: Subpart 2, Chapter 07 (retirement income) and Subpart 7 (residents and part-year residents))

In practice the dividing line is the federal one. The Department’s guidance on Form 1099-R says normal distributions of retirement are not taxable to Mississippi and early distributions are reported on the taxable pensions and annuities line of the return. A $150,000 withdrawal by a retired 70-year-old, as in our third household, adds nothing to Mississippi income. (Mississippi Department of Revenue, 1099 Guidance for Recipients (Form 1099-R))

On Roth accounts, the regulation says only that a distribution from a Roth IRA is treated as it is under the Internal Revenue Code. Neither the regulation nor the Form 80-105 instructions mention Roth conversions by name. The test both apply to money leaving a traditional IRA is whether it is an early distribution: income from an IRA is exempt, and an early distribution is not. (Mississippi Administrative Code, Title 35, Part III, Income and Franchise Tax: Subpart 2, Chapter 07 (retirement income) and Subpart 7 (residents and part-year residents))

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

Interest, dividends and capital gains are taxed as ordinary income

Investment income is what Mississippi taxes in retirement. The instructions state that Mississippi has no different rates for capital gains and that all income is taxed at the same rate, so a long-term gain or a qualified dividend is taxed like bank interest: 4% above the $10,000 threshold in 2026. Capital losses follow the federal limits. Interest on obligations of the U.S. government and of Mississippi and its subdivisions is exempt; interest on bonds of other states and their cities is taxable. (Mississippi Department of Revenue, Form 80-100: Resident, Non-Resident and Part-Year Resident Individual Income Tax Instructions (2025))

One class of gains is exempt. Mississippi exempts gain on the sale of authorized shares in financial institutions domiciled in Mississippi, and gain on interests in domestic corporations, limited partnerships and limited liability companies that were held for more than one year. The exempt gain is first reduced by losses from such sales in the same year or within two years before or after it. (Mississippi Department of Revenue: Individual Income Tax Frequently Asked Questions)

For calendar year 2026 the rate is 4% on taxable income above $10,000, and the first $10,000 is taxed at 0%. The rate was 4.7% for 2024 and 4.4% for 2025. The statute then sets 3.75% for 2027, 3.5% for 2028, 3.25% for 2029 and 3% for 2030 and later years. (Mississippi Legislature, 2025 Regular Session, House Bill 1 as sent to the Governor: Miss. Code 27-7-5 rates and the reductions after 2030)

The $10,000 at 0% belongs to each taxpayer, which the table above cannot show. Married couples who both have income file a combined return, one form with a column for each spouse, and the Department’s example computes each spouse’s tax separately and adds the results, so a couple can have $20,000 taxed at 0%. The filing status exemption is $6,000 single and $12,000 married, plus $1,500 for each taxpayer or spouse who is 65 or older, and the standard deduction is $2,300 single and $4,600 married. (Mississippi Department of Revenue: Individual Income Tax General Information (who should file, exemptions, deductions, tax rates))

On a combined return the $12,000 exemption and the $4,600 standard deduction may be divided between the spouses in any manner they choose, but income cannot be moved: if only one spouse has income, it may not be split. The examples on this page treat investment income as jointly owned and put half in each column. If one column comes out negative, the two are netted and taxed in a single column. Line numbers and these amounts are from the 2025 instructions, the latest published. (Mississippi Department of Revenue, Form 80-100: Resident, Non-Resident and Part-Year Resident Individual Income Tax Instructions (2025))

The income tax break tied to age is the additional exemption of $1,500 for a taxpayer or spouse who is 65 or older, with another $1,500 for blindness. A person counts as 65 on the day before the 65th birthday. At the 2026 rate each $1,500 is worth $60 of tax to someone with taxable income above $10,000. (Mississippi Department of Revenue, Form 80-100: Resident, Non-Resident and Part-Year Resident Individual Income Tax Instructions (2025))

The larger age-based break is on the home. An owner who is at least 65, or totally disabled, by January 1 moves to the second tier of the homestead exemption and is exempt from taxes on the first $7,500 of the home’s assessed value. Someone who turns 65 has to reapply during the next filing period, January 1 to April 1, to receive it. (Mississippi Department of Revenue: Homestead Exemption)

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Mississippi's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which is the same wherever they live. The tax bracket calculator and the guide to taxes in retirement cover that side.

As a comparative measure, Tax Foundation figures drawn from Census data put Mississippi property taxes at 0.58% of owner-occupied home value in 2024, 36th among the states. Its county figures are 0.53% in DeSoto County, 0.59% in Harrison County, 0.62% in Madison County and 0.72% in Hinds County. Those averages already reflect homestead exemptions. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

A bill is true value times the assessment ratio times the local millage rate. The constitution sets the ratio for single-family, owner-occupied homes at 10% of true value and for all other real property at 15%, so a second home or rental is assessed half again as heavily as a primary residence. Assessors must revalue real property at least every four years, and taxes are due by February 1 for property assessed the year before. (Mississippi Department of Revenue: Property Tax Frequently Asked Questions)

Homestead exemption has three tiers. Owners under 65 receive a credit of up to $300 against the tax on their home. Owners 65 or older, or totally disabled, are exempt on the first $7,500 of assessed value, and after the first year that exemption can grow to cover most later increases in value. Veterans with a total service-connected disability, veterans at least 90 years old and certain surviving spouses are exempt from all property tax on the homestead. (Mississippi Department of Revenue: Homestead Exemption)

Because a home is assessed at 10%, $7,500 of assessed value is $75,000 of true value, the figure the Department uses in describing the exemption for people 65 and older. A $300,000 home owned by a 67-year-old is taxed on $22,500 of assessed value, not $30,000; at a combined rate of 100 mills that is $750 a year less. (Mississippi Department of Revenue: Property Tax Frequently Asked Questions)

The exemption is tied to the income tax. An applicant and spouse must comply with Mississippi income tax law, and no one is eligible who, or whose spouse, claims to be a resident of another jurisdiction for Mississippi income tax. Filing as a nonresident or filing late are among the common reasons an exemption is disallowed, and a disallowed owner may have to repay the benefit. (Mississippi Department of Revenue: Homestead Exemption)

Mississippi’s general sales tax is 7% of the retail price of tangible personal property. Groceries, defined as food and drink for human consumption that could be bought with SNAP benefits, are taxed at 5%. Cars and light trucks are taxed at 5%. Residential electricity, heating fuel and water are taxed at 0%. The 7% rate also reaches many services, including vehicle repair, plumbing and electrical work, landscaping, pest control, dry cleaning and cable television. (Mississippi Department of Revenue: Sales Tax Rates)

House Bill 1, the same 2025 law that set the income tax schedule, reduced the grocery tax to 5% from July 1, 2025. That is two points below the general rate, or $200 a year on a household food budget of $10,000. (Mississippi Department of Revenue: 2025 Legislation (House Bill 1: income tax, grocery sales tax and fuel taxes))

Retail sales of prescription medicines and drugs are exempt from sales tax. Home medical equipment and supplies, prosthetics, hearing aids, prescription eyeglasses and oxygen are exempt when prescribed by a licensed physician and paid for in part or in total by Medicare or Medicaid. (Mississippi Department of Revenue: Sales Tax Exemptions)

Local sales taxes are small and narrow. As a comparative figure, the Tax Foundation puts Mississippi’s average local rate at 0.06% and its combined rate at 7.06% as of January 1, 2026, which ranks 23rd; the 7% state rate is tied for second highest in the country. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figures))

Mississippi has no estate tax in effect and no inheritance or gift tax. Its estate tax was built on the federal credit for state death taxes; since that credit was replaced by a deduction, no Mississippi estate tax return is required for anyone dying on or after January 1, 2005. The Department of Revenue states that Mississippi has neither an inheritance tax nor a gift tax. (Mississippi Department of Revenue: Estate Tax)

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

House Bill 1 of 2025 extended the rate cuts already under way. The 4% rate for 2026 was in the statute before the bill; the bill added 3.75% for 2027, 3.5% for 2028, 3.25% for 2029 and 3% for 2030 and after. The bill did not change the $10,000 taxed at 0%, the exemptions or the standard deduction. (Mississippi Legislature, 2025 Regular Session, House Bill 1 as sent to the Governor: Miss. Code 27-7-5 rates and the reductions after 2030)

Below 3% the path to eliminating the tax depends on triggers. For 2031 and any later year, if the Working Cash-Stabilization Reserve Fund is fully funded, the rate falls when adjusted general fund revenue for a fiscal year exceeds appropriations for the following year by enough: 0.2 points when the excess is at least 0.85% of the cost of a one-point cut, 0.25 points at 1%, and 0.3 points at 1.15% or more. The first comparison uses fiscal year 2029 revenue and fiscal year 2030 appropriations. (Mississippi Department of Revenue: 2025 Legislation (House Bill 1: income tax, grocery sales tax and fuel taxes))

The Department’s summary of the 2026 session lists no change to individual rates, exemptions or the retirement income exemption; the income tax bills it lists create or revise credits. It also lists local measures, among them a reinstated 0.25% tax on food and drink in the City of Tupelo, and homestead bills: House Bill 420 gives a full exemption to honorably discharged veterans 85 or older and their unremarried surviving spouses, and House Bill 4044 lets homeowners with unpaid state income tax keep the exemption while part of it is applied to the debt. (Mississippi Department of Revenue: 2026 Legislation)

A resident is anyone domiciled in Mississippi for other than temporary or transitory purposes, or who maintains a legal or actual residence there. Domicile is the permanent home a person intends to return to, and it continues until a new one is actually established and the old one abandoned. The regulation says a person who retires and moves to Mississippi with no definite intention of leaving shortly is domiciled there and taxable on all income. (Mississippi Administrative Code, Title 35, Part III, Income and Franchise Tax: Subpart 2, Chapter 07 (retirement income) and Subpart 7 (residents and part-year residents))

Keeping a home or apartment in Mississippi, meeting the requirements to vote there or receiving homestead exemption makes a person a legal resident, and that status lasts until citizenship rights are given up and a new legal residence is established. The instructions list a changed driver’s license, vehicle tags, voter registration and property taxes as evidence of intent. There is no day-count test in the instructions. (Mississippi Department of Revenue, Form 80-100: Resident, Non-Resident and Part-Year Resident Individual Income Tax Instructions (2025))

A person who moves in or out during the year files Form 80-205 and is taxed on income from all sources received while a resident, plus Mississippi-source income received while a nonresident. The standard deduction and exemptions are allowed only in the ratio of Mississippi net income to total net income for the year; for a married couple, total net income means that of both spouses. (Mississippi Administrative Code, Title 35, Part III, Income and Franchise Tax: Subpart 2, Chapter 07 (retirement income) and Subpart 7 (residents and part-year residents))

Under federal law (4 U.S.C. 114) a state cannot tax the retirement income of a person who is not its resident or domiciliary. A pension or 401(k) built in a state that taxes retirement income is taxed only by the state where the retiree lives when it is paid, so it arrives in Mississippi exempt. The same statute stops Mississippi from taxing a pension earned there by someone who has since moved away. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)