State-by-State Guide to Taxes on Retirees
Tool | November 2019

State-by-State Guide to Taxes on Retirees


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The Bottom Line
Flag of Mississippi

Most Tax-Friendly

The tea is sweet in the Magnolia State, and so is the income tax environment for retirees. Mississippi not only exempts Social Security benefits from state income tax, it also excludes withdrawals from IRAs and 401(k) plans, income from public and private pensions, and other types of qualified retirement income


Mississippi’s state sales tax rate of 7% is the second-highest in the U.S. (only California, at 7.25%, is higher), and Mississippi is one of a minority of states that charges sales tax on groceries. But localities add very little, if anything, on top of the state’s rate, and motor vehicle sales are taxed at only 5%.

Property taxes on residential real estate aren’t too bad, at an average of $862 in taxes per $100,000 of assessed home value, which is below the U.S. average. Massachusetts

State Sales Tax

7% state levy. Only two localities, Jackson (1%) and Tupelo (0.25%) add to that. According to the Tax Foundation, that makes for an average combined rate of 7.07%. Mississippi is one of a minority of states that tax groceries.

Income Tax Range

Low: 3% (on taxable income of $1,000 or more)

High: 5% (on more than $10,000 of taxable income)

Income tax rates are being gradually reduced. By 2022, the first $5,000 of taxable income will be exempt.

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

Income from private employer, government, and military retirement plans is exempt.

Railroad Retirement benefits are also exempt.

Property Taxes

In Mississippi, residents pay an average of $862 in taxes per $100,000 of assessed home value.

Tax breaks for seniors: For homeowners 65 and older or totally disabled, there is an exemption on the first $75,000 of value.

Vehicle Taxes

Vehicle sales are taxed at 5%, which is 2% below the general rate. Mississippi also charges an annual property tax on vehicles based on their age and value. Rates for this tax are set at the county level. In Lafayette County, for example, you’d pay $285 on a vehicle valued at $20,000.

Inheritance and Estate Taxes