Do you need the most recent information about state taxes in Mississippi? You are in the right place. This article furnishes you with up-to-date information on Mississippi state taxes.
It is crucial that you are aware of the latest changes to the Mississippi state tax structure. Whether you are an individual or a business owner, staying on top of the latest changes to state tax laws is essential to effective financial planning and regulatory compliance.
The tax rate in Mississippi grows with increasing taxable income as part of a progressive tax rate structure. Additionally, Mississippi state taxes are levied on income, sales, property, and other transactions. There is a significant amount of up-to-date information available regarding Mississippi state taxes in 2023. Read on to find out more!
2023 Updates of Mississippi State Taxes include:
- Elimination of the 4% Bracket
- Reduction of the 5% Rate
- Increase of the Standard Deduction
- Increase of the Personal, Dependent and Additional Exemption
- Rise of the Reforestation Tax Credit
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1. Elimination of the 4% Bracket
Updates on state taxes in Mississippi in 2023 include the removal of the 4% bracket. This is part of a tax reform plan that aims to simplify the tax system and reduce the tax burden on Mississippi taxpayers.
The 4% bracket is a term that refers to the tax rate that Mississippi charges on the next $5,000 of taxable income after the first $5,000.
The eradication of the 4% bracket means that, as a taxpayer, you no longer need to pay 4% on the subsequent $5,000 of taxable income after the initial $5,000. This saves you up to $200 in taxes. Excited? Sure!
Here is a further breakdown of what this entails. Look at this example: if your taxable income is $15,000, you will pay 0% on the first $5,000 and 5% on the remaining $10,000. Under the current system, you would pay 0% on the first $5,000, 4% on the next $5,000, and 5% on the last $5,000. Your tax liability will drop from $700 to $500. What a huge relief!
This removal cuts across most Mississippi taxpayers, especially those with low and middle incomes. The effect is a tax cut for 80% of taxpayers and an increase for only 3%.
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2. Reduction of the 5% Rate
A 2023 update on Mississippi state taxes is the reduction of the 5% rate to 4.5%. The 5% rate is the highest tax rate that Mississippi currently charges on taxable income in excess of $10,000. The cut is part of an effort to streamline the tax code and ease the financial burden on Mississippi taxpayers.
How does this affect you? It means that you pay less tax on the remaining taxable income in excess of $5,000. Wow! This helps you save up to $125 in taxes. That’s amazing!
3. Increase of the Standard Deduction
An update on Mississippi tax in 2023 is the increase of standard deduction from $2,300 to $2,500 for single filers and from $4,600 to $5,000 for married filers
The standard deduction is an amount you can deduct from your taxable income to lower your tax liability. In Mississippi, you can take either the standard deduction or the itemized deduction, whichever is greater.
In Mississippi, you have the option to select the higher of the two: the itemized deduction or the standard deduction.
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4. Increase of the Personal, Dependent and Additional Exemption
An update on Mississippi tax in 2023 is the increase in personal, dependent, and additional exemptions. The personal exemption will increase from $6,000 to $6,500 for single filers and from $12,000 to $13,000 for married filers; the dependent exemption will increase from $1,500 to $2,000 for each qualifying dependent; and the additional exemption for taxpayers over 65 or blind will increase from $1,500 to $2,000.
The personal exemption is a tax benefit for yourself and your spouse. This means you can pay less taxes if you are single or married. The personal exemption is different from the filing status exemption, which depends on whether you are single, married, head of family, etc.
The dependent exemption is an amount that you can take off your income for each person who depends on you financially. A qualifying dependent is a relative or other person who lives with you, depends on you, and meets certain tests of age, relationship, residency, and income. This means that you can save more money on your taxes if you have dependents.
The additional exemption is an extra amount that you can take off your income for being over 65 or blind. If you are over the age of 65 or legally blind, you are eligible for a higher deduction.
For example, if you are single, over 65, and blind, you can claim a total deduction of $11,500 in 2023 ($6,500 for your filing status and $5,000 for your additional conditions), but if you are married with two qualifying dependents and over 65, you get to claim a deduction of $19000. That’s impressive!
5. Rise of the Reforestation Tax Credit
An update on Mississippi tax in 2023 is the growth of reforestation tax credit from 50% to 75%
The Reforestation Tax Credit is a benefit you get as a landowner if you plant approved tree species on Mississippi land, which is a credit for the cost of planting.
To be eligible for the tax credit, have a plan put together by a registered forester and let the Mississippi Department of Revenue verify it. Adhere to guidelines regarding the type, size, and placement of the trees you choose to plant.
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Recap
In conclusion, staying up to date with Mississippi’s state tax laws and regulations is crucial for you as a taxpayer. So take note of the updates on Mississippi state taxes in 2023, which include the removal of the 4% tax bracket, the reduction of the 5% tax rate, an increase in the standard deduction, increases in the personal, dependent, and supplementary exemptions, and an increase in the reforestation tax credit.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. . For comprehensive tax, legal or financial advice, always contact a qualified professional in your area. S’witty Kiwi assumes no liability for actions taken in reliance upon the information contained herein.
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