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 Most Tax-Friendly One of Kiplinger's top ten most tax-friendly states for retirees, the Magnolia State offers a sweet income tax deal for retirees. It not only exempts Social Security benefits from state income taxes, but it also excludes all qualified retirement income. Remaining income is taxed at a maximum 5%. Mississippi is home to some of the cheapest property taxes in the nation. Seniors qualify for a homestead exemption on the first $75,000 of value. State Sales Tax 7% state levy. Only two localties, Jackson (1%) and Tupelo (0.25%) add to that, making the average combined rate is 7.07%, according to the Tax Foundation. Groceries are fully taxable. Income Tax Range Low: 3% (on less than $5,000 of taxable income)High: 5% (on more than $10,000 of taxable income)Effective income tax rate: 4.6%/individual, 4.9%/joint Social Security Benefits are not taxed. Exemptions for Other Retirement Income Qualified retirement income -- including income from IRAs, 401(k)s, 403(b)s, Keoghs, and qualified public and private pension plans -- is exempt from state income tax. (Early distributions are not considered retirement income and may be subject to tax.) Interest income from federal securities and obligations of Mississippi and its political subdivisions are all exempt. Railroad Retirement benefits are not taxed.IRAsExempt from state income tax. 401(k)s and Other Defined-Contribution Employer Retirement PlansExempt from state income tax. Private PensionsExempt from state income tax.Public PensionsExempt from state income tax. Property Taxes The state offers a homestead exemption of up to $300 for all eligible taxpayers. The median property tax on Mississippi's median home value of $104,000 is $854.Tax breaks for seniors: For homeowners 65 and older or totally disabled, there is an exemption on the first $75,000 of value. Inheritance and Estate Taxes There is no inheritance tax or estate tax.