State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees. Go to Retiree Tax Map Mississippi Add to State Compare List | View List View State Compare List (0) selected | Compare up to 5 The Bottom Line 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, but 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 tied for 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.Property taxes on residential real estate aren't too bad, either. Mississippi's median annual property tax rate is well below the U.S. average. Income Tax Range Low: 3% (on taxable income from $3,001 to $5,000)High: 5% (on taxable income over $10,000) Taxation of Social Security Benefits Social Security benefits are not taxed by the state. Tax Breaks for Other Retirement Income Income from private employer, government, and military retirement plans is exempt.Railroad Retirement benefits are also exempt. 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%.Groceries: TaxableClothing: TaxableMotor Vehicles: Taxable (5%)Prescription Drugs: Exempt Real Property Taxes For homeowners 65 and older or totally disabled, there is an exemption on the first $75,000 of value. Annual Car Taxes and Fees An annual vehicle property tax based on the car's age and value is imposed. Rates are set at the county level. Values are determined by the State Tax Commission using information from a nationwide valuation service. Estate and Inheritance Taxes No estate or inheritance tax.