Mississippi Tax Information
No. 1 reason for retiring in Mississippi? Tax Savings
Slower pace of life
Aren’t bad either.
By BECKY GILLETTE
Mississippi Business Journal Contributing Writer
June 28-July 4 , 2004
Why do retirees relocate to Mississippi?
You can talk about escaping the cold and ice up North. The Southern hospitality. A slower pace of life. Less crime and congestion.
The bottom line is the bottom line, though: tax savings which allow retires to enjoy more of their hard-earned income is the number one attraction for relocating retirees.
“The main reason why retirees want to relocate here is the tax savings,” says Tona Becker, retirement coordinator for the City of Madison. “For a married couple 65 or older, the first $75,000 of appraised value of homes is exempt from property tax. That is a big, big plus. No state income taxes on retirement income is also a big deal.”
‘Let’s check it out’
Virginia and Myron Bernitz lived in Joplin, Mo., for 17 years before relocating to Tupelo about a year ago.
“My husband said we moved here for tax purposes,” Virginia said. “Taxes were the most important thing in his book. Mine was being closer to my family. We do live it here. It is a great place to live. I have joined a Red Hat Society, we have found a church that we love and we are building a home.”
The Bernitz were driving through Tupelo on the way to visit relatives in Birmingham when they saw a billboard on the highway the advertised Tupelo as a “Certified Retirement City.”
“I said to my husband, ‘Let’s check it out,’ Bernitz said. “We went to City Hall and met with Jean Mooneyham (Tupelo retirement director), who told us that a couple paid no property taxes on the first $75,000 worth of a home
Mississippi is tax-friendly when it comes to retirees. In addition to low tax rates in general, retirees living in Mississippi don’t have to pay any state income tax on qualified retirement income. There is also an additional bonus exemption on property taxes upon reaching age 65.
Income Tax- Qualified retirement income is exempt from state income tax.
Social Security is not taxed, regardless of total income. Retirement income from IRAs, 401s/403s, Keoghs, and qualified public and private pension plans is not taxable. Interest income from federal securities and obligations of Mississippi and its political subdivisions is exempt. Gains on the sale of stock of a Mississippi corporation are exempt from Mississippi income tax. The state’s income tax rates are 3%, 4%, and 5%. The first $5,000 of taxable income is taxed at 3%, the second $5,000 at 4%, and all above $10,000 is taxed at 5%. A married couple filing joint returns with joint or separate earned income can separate their income, which would allow both individuals to take advantage of lower rates.
There is a standard deduction of $2,300 for single taxpayers, $4,000 for married filing jointly, and $3,400 for head of house hold. The same itemized deductions for federal income tax apply with the exception of state income tax. Single taxpayers may claim a $6,000 exemption, those filing jointly $12,000, and head of household $9,500. Fifteen hundred dollars ($1,500) is allowed for each additional exemption.
Property Tax – Real property and motor vehicles are subject to ad valorem taxes-meaning the tax is assessed in relationship to the value of the property. Single family, owner-occupied residential property is assessed at 10% of true value. Such property with a true value of $73.510 or more is granted a homestead exemption credit of $300 against the ad valorem tax. Persons 65 years of age and older or persons who are disabled receive a bonus-those persons are exempt from ad valorem taxes up to $75,000 of the market value on homestead property. The market value is determined by the local tax assessor using state guidelines. There is a hearing procedure if you do not agree with the assessment. Motor vehicles are assessed at 30% of true value as determined by the State Tax Commission. A percentage of the assessed value as determined by the State Tax Commission is allowed a credit against the ad valorem tax. Historically, the percentage credit allowed has ranged from 5% to 6%.
Property taxes include county, municipal, and school taxes. There is no state ad valorem tax. Taxes vary from city to city and county to county depending on the local tax rate.
Real Estate Tax – There is no state real estate tax.
Sales Tax – The state sales tax is 7% for most goods and services. There is no local general sales tax, although some areas may have a tourism or hotel/motel tax and/or restaurant tax. The sales tax rate for automobiles is 5%.
The following are exempt from sales tax:
Intangible Personal Property Tax – There is no intangible personal property tax.
Gift Tax: There is no gift tax.
Estate Tax – Estate are taxed at the amount allowed as a state credit on the federal estate return. Mississippi has no inheritance tax.Information provided by the Mississippi State Tax Commission www.mstc.state.ms.edu