Taxes in Mississippi for retirees: What to know in 2026
Mississippi exempts all retirement income from state taxes. Combined with low property taxes and no estate tax, it's one of the most tax-friendly states for retirees. Here's the full picture.
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Key takeaways
Mississippi does not tax Social Security, pensions, 401(k) withdrawals, IRA distributions, or any other qualified retirement income at the state level. Federal taxes still apply.
Mississippi's effective property tax rate is approximately 0.58%, and a homestead exemption can reduce the bill further.
The state sales tax rate is 7.00%, and unlike most states, Mississippi taxes groceries. For retirees on a fixed budget, this adds to everyday costs.
Does Mississippi tax retirement income?
No. Mississippi exempts all qualified retirement income from state income tax. This includes:
Social Security benefits
Pension income (government, military, and private employer)
Annuity income
One important caveat to keep in mind is that early distributions from retirement accounts (taken before meeting the plan's retirement requirements) are not considered retirement income and may be subject to Mississippi's state income tax.
Mississippi does have a state income tax on non-retirement income. For the 2026 tax year, the rate is a flat 4.0% on income above $10,000 for individuals ($20,000 for married couples filing jointly), with the first $10,000/$20,000 exempt. This rate is scheduled to continue declining in coming years as part of a phased reduction.
Is Social Security taxed in Mississippi?
No, Social Security isn’t taxed at state level in Mississippi.
At the federal level, Social Security may be partially taxable depending on your combined income (adjusted gross income + nontaxable interest + half of your Social Security benefits):
Single filers: Combined income between $25,000 and $34,000 → up to 50% of benefits may be taxable. Above $34,000 → up to 85%.
Joint filers: Combined income between $32,000 and $44,000 → up to 50% of benefits may be taxable. Above $44,000 → up to 85%.
For more on how retirement income is taxed at the federal level, see our guide on taxes in retirement.
Other taxes retirees should know about in Mississippi
Income tax is just one part of the picture. Here's how Mississippi handles the other taxes that affect retirees day to day.
Property taxes
Mississippi's average effective property tax rate is approximately 0.58%, compared to a national average of about 0.91%. On a $175,000 home (near Mississippi's median home value), that works out to roughly $1,015 per year in property taxes.
The state also offers a homestead exemption for owner-occupied primary residences, though it is not automatic; residents must actively apply for the exemption through their county tax assessor's office. While homeowners under 65 receive a standard tax credit of up to $300, retirees enjoy a much larger benefit. As of 2026, residents 65 and older qualify for a senior homestead exemption that completely shields the first $12,500 of their home's assessed value from all ad valorem property taxes. Because Mississippi assesses residential property at 10% of true value, this senior exemption effectively removes the first $125,000 of your home's actual market value from taxation entirely.
Sales taxes
Mississippi's state sales tax rate is 7.00%, with local taxes adding up to 1%, for a combined average of 7.06%. This is above the national average.
One notable detail for retirees is that Mississippi taxes groceries, which most states do not. Prescription drugs are exempt from state sales tax, but the grocery tax adds to everyday costs on a fixed budget.
The state holds two annual sales tax holidays — one for back-to-school clothing (last weekend of July) and one for firearms and hunting supplies (first weekend of September).
Estate and inheritance taxes
Mississippi does not impose estate or inheritance taxes. Your heirs will not owe state-level taxes on inherited assets, regardless of the estate's size.
Federal estate taxes may still apply for very large estates. In 2026, the federal estate and gift tax exemption is $15 million per individual ($30 million for married couples).
For more on planning, see our estate planning guide.
Capital gains taxes
Mississippi taxes capital gains as ordinary income at the state income rate (on gains above the $10,000/$20,000 exemption threshold). This applies to gains from selling investments, real estate, or other assets. For retirees who plan to sell property or liquidate investments, this is worth factoring in.
Is Mississippi a good state to retire in?
Mississippi's tax structure is among the most favorable in the country for retirees. But taxes are one piece of a larger picture.
What works well:
No state tax on any retirement income — Social Security, pensions, and retirement account withdrawals are all exempt.
Low property taxes with a homestead exemption that can further reduce the bill.
No estate or inheritance tax.
One of the lowest costs of living in the country. Housing, groceries, utilities, and transportation are all below the national average, which can make retirement savings stretch further.
Natural beauty and outdoor recreation. The state offers forests, rivers, Gulf Coast beaches, and a slower pace of life that appeals to many retirees.
What to weigh carefully:
Grocery tax. Mississippi taxes groceries at 5.00%, as of 2026.
Healthcare access. Mississippi ranks below average in healthcare access, quality, and availability of specialized care, particularly in rural areas.
Natural disaster risk. The state is prone to tornadoes (averaging 40+ per year) and, along the Gulf Coast, hurricanes. Insurance costs and storm preparedness are real considerations.
Hot, humid summers. Temperatures regularly reach 90–100°F during summer months, with high humidity year-round.
Limited urban amenities. Jackson is the largest city, but much of the state is rural. Access to cultural attractions, dining, and entertainment may require longer drives.
Bottom line
Mississippi's combination of no state tax on retirement income, low property taxes, no estate tax, and a very low cost of living makes it one of the most financially favorable states for retirees. The trade-offs are primarily non-tax-related: healthcare access, natural disaster risk, summer heat, and the grocery tax that most states don't impose.
For retirees who prioritize stretching their savings and are comfortable with Mississippi's climate and lifestyle, the tax advantages are substantial, especially for those drawing from multiple retirement income sources.
If you're looking to grow your retirement savings with competitive, guaranteed returns, Raisin gives you access to high-yield savings accounts and CDs across multiple federally insured banks and credit unions, all from a single account.
Does Mississippi tax retirement income?
No, Mississippi does not tax qualified retirement income at the state level. Social Security, pensions, 401(k) withdrawals, and IRA distributions are all exempt. Early distributions from retirement accounts taken before meeting plan requirements may be subject to the state income tax.
Federal income taxes still apply to most retirement income regardless of where you live.
What is the property tax rate in Mississippi?
Mississippi's average effective property tax rate is approximately 0.58%, which is well below the national average of about 0.91%. The state also offers a homestead exemption providing a credit of up to $300 on owner-occupied primary residences.
Rates vary by county — Madison County has the highest median property tax, while several rural counties have among the lowest in the country.
Does Mississippi tax groceries?
Yes, Mississippi taxes groceries. A tax of 5.00% applies to most food purchases. Prescription drugs are exempt from state sales tax.
For retirees on a fixed budget, this can add noticeably to everyday costs compared to states that exempt groceries from sales tax.
How does Mississippi compare to other tax-friendly retirement states?
Mississippi's retirement income exemption is comparable to states like Pennsylvania and Illinois, which also exempt all retirement income despite having a state income tax. Compared to no-income-tax states like Florida and Texas, Mississippi's advantage is significantly lower property taxes and a much lower cost of living overall.
The main trade-offs compared to Florida or Texas are healthcare access, infrastructure, and available amenities. For a broader comparison, see our guide to the best states to retire for taxes.
The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
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