Mississippi Lawmakers Pass Plans to Eliminate Income Tax, Raise Gas Tax

Mississippi's House and Senate leaders are advancing competing plans to eliminate the state's income tax, which currently constitutes about a third of the budget, and replace it with increased gasoline taxes. The House proposal suggests a 5-cent annual increase in gas tax for three years and a one percent sales tax increase primarily for infrastructure, while the Senate proposes a 9-cent increase over the same period. Both plans face scrutiny over their potential impacts on the poorest state in the country as federal spending cuts loom. The Senate's narrow passage relied on support from four Democrats, highlighting the fragile coalition and differing opinions on the speed of tax reform. In contrast, Michigan's House recently passed a legislation to reduce its income tax rate from 4.25% to 4.05%, with mixed reactions from Democratic lawmakers who argue it disproportionately benefits the wealthy. The Michigan tax cut is projected to save the median household around $131 annually but may lead to significant revenue losses, raising concerns about future funding for state services.