Retiring in Mississippi: What the State Actually Takes

On the ordinary retirement profile — $34,000 of Social Security and $61,000 of plan distributions — Mississippi takes $0 a year in state income tax.

That is the number people compare, and it is the smallest of three. Property tax adds about $1,852 on the state's $284,900 median home, and insurance another $4,445. The three together come to $6,297, placing Mississippi 13th of 50.

A note before you start. This is general education, not tax advice. Every Mississippi figure comes from this site's own fifty-state income-tax dataset and its retirement tax engine, computed for a single filer aged 70 unless stated otherwise; property tax, median home price and insurance figures come from the site's core state dataset. Rates are for tax year 2026. Property tax is assessed locally in most states, so the effective rate here is a statewide figure rather than your county's.

1. What Mississippi takes from retirement income

On Social Security. Fully exempt under Miss. Code Ann. 27-7-15(4)(k), which excludes amounts paid under the federal Social Security Act along with Railroad Retirement and federal Civil Service. The Department's FAQ answers the question directly: 'No. Mississippi does not tax benefits received from U.S. Social Security, Railroad Retirement Public Welfare assistance, Veterans Administration payments or workers compensation.'

On 401(k) and IRA distributions. Exempt, but only once the plan's retirement requirements are met — this condition is the whole story and most summaries flatten it. The Department states: 'Generally, retirement income, pensions and annuities are not subject to Mississippi Income tax if the recipient has met the retirement plan requirements. Early distributions are not considered retirement income and may be subject to tax.' The instruction booklet is sharper: 'Pensions and annuities that are taxable as early or excess distributions under the Federal Internal Revenue Code (see Federal Form 5329) do not qualify for exemption from Mississippi income tax.' Mississippi never states an age. It piggybacks the federal determination, so the right test is 'is this an early distribution on federal Form 5329?', not 'is the taxpayer 59 and a half?' — which means every federal section 72(t) exception (age-55 separation, substantially equal periodic payments, death, disability, a QDRO) also makes the distribution exempt in Mississippi. There is no Mississippi early-withdrawal penalty; an early distribution is simply ordinary Mississippi income. Also taxable regardless of age: separation pay, and investment income from stocks, bonds or property, which is never 'retirement allowance' income.

2. The rule that decides your Mississippi bill

All three are fully exempt, subject to the same met-the-retirement-requirements condition as qualified plans. Miss. Code Ann. 27-7-15(4)(k) covers federal systems including Social Security, Railroad Retirement and Civil Service, plus 'the Mississippi Public Employees Retirement System, Mississippi Highway Safety Patrol Retirement System or any other retirement system of the State of Mississippi or any political subdivision thereof'. Paragraph (l) covers 'any private retirement system or plan of which the recipient was a member at any time during the period of his employment'. Military retirement falls under (k) as a retirement system of the United States government, and the Department's own checklist marks veterans' retirement pay, military disability payments and veterans' disability pensions all non-taxable. The exemption carries to a surviving spouse or other beneficiary at the death of the primary retiree.

Mississippi's rate is mid-phase-down under HB 1 of 2025, the Build Up Mississippi Act: 4.7% in 2024, 4.4% in 2025, 4.0% in 2026, 3.75% in 2027, 3.5% in 2028, 3.25% in 2029, and 3% from 2030. The 2026 figure is correct only for 2026.

Where both spouses have their own positive taxable income, each gets their own $10,000 at 0% — $20,000 in total — because the return splits into Columns A and B. Where only one spouse has income, the couple gets one $10,000.

3. What Mississippi charges at three income levels

The same state, three retirements. All figures are for a single filer aged 70.

Read down the middle column. The exemption that makes a modest retirement free here is worth nothing to an affluent one — the bill goes from $0 to $868 as income rises. That is a phase-out, and it is the single most misreported feature of state retirement taxation.

A married couple with $48,000 of Social Security and $62,000 of distributions pays $0.

4. Property tax, and why it lands harder in retirement

An effective rate of 0.7% on the state's $284,900 median home is about $1,852 a year.

For a retiree this is a harder cost than income tax, and the reason is structural: property tax is levied on the house, while retirement income falls. A bill sized to a working income arrives every year after the income has gone.

It is also assessed locally almost everywhere, so a statewide effective rate conceals real variation between counties. Treat the figure above as the state's shape rather than as your bill.

Mississippi does have a homestead provision, and it is the one lever on this line worth understanding.

Mississippi's homestead exemption reduces ad-valorem property tax on an owner-occupied primary residence by exempting the first $7,500 of assessed value, capped at $300 of actual tax dollars (whichever is less) — a modest, statewide flat exemption rather than a percentage-of-value or uncapped exemption like some other states. Requires filing with the county tax assessor. dor.ms.gov (the primary source) remains unreachable from this environment (persistent TLS certificate error, reconfirmed 2026-08-28) — this figure is sourced from Wikipedia's 'Homestead exemption' article as a secondary source and accepted for use on that basis. Could not confirm whether an enhanced additional exemption exists for seniors (65+) or disabled homeowners; do not assume one without further verification.

Two things about homestead rules catch people out after a move. They almost always require the property to be your primary residence, which a snowbird splitting the year has to be able to demonstrate. And several states require an application to the county rather than granting it automatically — a benefit you qualify for and never claimed is worth nothing.

5. Insurance, the line nobody prices

Average home insurance in Mississippi: $4,445 a year — 44th cheapest of the fifty states.

This is the line almost no retirement comparison includes, and across the country it varies more than income tax does: from Hawaii's $900 to Florida's $8,375, a ninefold spread.

For a retiree it behaves like a second property tax. It rises independently of income, a fixed-income household absorbs the whole increase, and it is a condition of the mortgage if you still have one.

6. What retiring in Mississippi actually costs

Income tax on the typical retirement profile, plus property tax and insurance on each state's own median home. Mississippi is shown against its own neighbours in the ranking, and against the extremes.

Mississippi comes to $6,297, 13th of 50.

Income tax is 0% of that total, which is the whole point: the number everybody checks contributes nothing to the number that matters.

One large caveat, and it matters. Each row uses that state's own median home, and those differ a great deal. So this compares the typical house in each state, not the same house in each state — buying below a state's median improves its figure materially.

7. The exemption shrinks as your income rises

Mississippi's exemption is not a flat one. It shrinks as income rises, from $0 on a modest retirement income to $868 on an affluent one. Exempt, but only once the plan's retirement requirements are met — this condition is the whole story and most summaries flatten it. The Department states: 'Generally, retirement income, pensions and annuities are not subject to Mississippi Income tax if the recipient has met the retirement plan requirements. Early distributions are not considered retirement income and may be subject to tax.' The instruction booklet is sharper: 'Pensions and annuities that are taxable as early or excess distributions under the Federal Internal Revenue Code (see Federal Form 5329) do not qualify for exemption from Mississippi income tax.' Mississippi never states an age. It piggybacks the federal determination, so the right test is 'is this an early distribution on federal Form 5329?', not 'is the taxpayer 59 and a half?' — which means every federal section 72(t) exception (age-55 separation, substantially equal periodic payments, death, disability, a QDRO) also makes the distribution exempt in Mississippi. There is no Mississippi early-withdrawal penalty; an early distribution is simply ordinary Mississippi income. Also taxable regardless of age: separation pay, and investment income from stocks, bonds or property, which is never 'retirement allowance' income. A phase-out is a marginal rate in disguise. Inside the phase-out band an extra dollar of income costs the ordinary rate plus the exemption it withdraws — so the real cost of a larger withdrawal is higher than the headline schedule suggests.

8. What a Roth conversion costs in Mississippi

A conversion of $100,000 costs $0 in Mississippi state tax, even though Mississippi has an income tax.

That is because the state exempts retirement plan distributions outright, and a Roth conversion is a distribution. There is no ceiling at which the exemption stops in the range tested here.

The federal tax is unchanged and still due, along with the IRMAA consequence two years later. The state's share is what disappears.

9. What part-time work costs here

Here is the asymmetry that defines Mississippi for a retiree: $100,000 of plan distributions costs $0, and $20,000 of part-time work costs $68.

The state exempts retirement income and taxes wages. So the marginal cost of another dollar of 401(k) money is nothing, and the marginal cost of another dollar earned is 0.3%.

That inverts the usual advice. The conventional counsel is to work a little longer and preserve the balance. In this state the arithmetic points the other way — drawing on the pre-tax balance is the cheaper source of the next dollar, by a wide margin.

10. The order to draw your accounts in

The order you draw accounts in is worth real money, and the right order depends on the state.

Draw the pre-tax balance first, which is the opposite of the usual advice. In Mississippi the state cost of a plan distribution is zero and the state cost of earned income is 0.3%, so the pre-tax account is the cheapest dollar available.

Roth money is worth less here than elsewhere, because the thing a Roth protects against — state tax on the withdrawal — does not exist in this state. It still protects against federal tax, and against a future move to a state that does tax distributions.

Required minimum distributions overrule all of this from 73 onward. Once they begin you must take the calculated amount whether the order suits you or not, which is the argument for drawing down or converting the pre-tax balance in the years before.

11. Or move across the state line

For most people the real alternative to Mississippi is not Wyoming — it is the state on the other side of the line, near the same family, the same doctors and the same weather.

Tennessee is the cheapest of the group at $6,215, $82 below Mississippi. Whether that is worth a move is a question about your life rather than your spreadsheet — but it is the comparison worth running, because it is the one you could actually act on.

One thing this table cannot show is the county. Property tax is set locally, and the spread inside a single state is routinely wider than the gap between two neighbouring states. A border move to a cheaper state and an expensive county can leave you worse off.

12. If you are moving to Mississippi from somewhere else

The eight most populous states people leave, measured against Mississippi on the same three lines.

Mississippi is cheaper than 7 of these eight. That is the case for the move, on these lines.

A move is not free, and this table does not price it. Transaction costs on both houses run to several per cent of the sale price, and at typical values that is often more than the first two or three years of the saving.

Mississippi charges no transfer tax on the purchase, which is one closing cost you will not meet here and do meet in most states. Closing costs here run about 4% to 6% of the price — $11,396 to $17,094 on the median home, which is the real entry fee for the annual saving this article has been describing.

13. Where these Mississippi figures are approximate

Every income tax figure above comes from this site's own Mississippi record, and that record notes its own limits. They are reproduced here rather than left in the dataset, because a reader who falls into one of these cases is being quoted a number that is wrong for them.

• A married-filing-combined subtlety this site's calculator does not model.
• The figure here applies a single $10,000 to the joint threshold, which overstates the tax for a two-earner Mississippi couple by up to $400.

None of this affects the property tax or insurance lines, which come from a separate dataset and are not modelled.

If you are in one of the cases above, treat the income tax figure as the shape rather than the amount and get the number from a preparer who can see your actual return.

14. What Mississippi does not exempt you from

The federal system, entirely. This is the commonest misunderstanding about state retirement taxation, and it is worth stating plainly.

Required minimum distributions still apply. The amount is federal — your prior-year balance divided by an IRS life expectancy factor — and identical in all fifty states. A state changes what the distribution costs you, not whether you must take it.

Social Security is still federally taxable, on the federal provisional-income calculation, whatever your state does with it.

IRMAA still applies, with its two-year lag. A large conversion or distribution raises a Medicare premium two years later regardless of address.

And capital gains are still federally taxed. What Mississippi adds on top is a separate question from what the federal system takes.

15. Establishing that you actually live here

Any state tax advantage is worth nothing until Mississippi is your domicile, and the state you left may disagree about when that happened.

High-tax states audit departing residents. The question is not whether you own a home here; it is whether you genuinely abandoned the old domicile. Days spent in each state, voter registration, vehicle registration, where your doctors are and where you claim a homestead all bear on it.

The snowbird case is the risky one. Splitting the year between two states while keeping a home in both is exactly the profile a residency audit is built for. If a plan depends on the saving, count the days from the first year rather than reconstructing them afterwards.

16. Who Mississippi actually suits

Someone on a modest retirement income. Mississippi charges $0 at the modest profile — the exemption does its work at the bottom of the range.

It suits an affluent retiree least. At the affluent profile the bill is $868, and whatever exclusion helps a modest income has stopped helping by then.

It suits a homeowner less than a renter, because $4,445 of average insurance attaches to the property rather than to the income.

17. What to check before you decide

Get your county's actual property tax rate, not the state average. Property tax is levied locally almost everywhere, and the spread inside a state is often wider than the spread between states.

Get a real insurance quote on a real address. $4,445 is the state average; construction, roof age and exposure move it a long way.

Work out your own income tax rather than using the profile above. $95,000 split one way is not $95,000 split another, and in Mississippi the mix between Social Security and distributions changes the answer.

And check what your current state actually charges you before assuming it is worse. On these three lines the ranking surprises people in both directions.

Frequently asked questions

Does Mississippi tax Social Security? No. Fully exempt under Miss. Code Ann. 27-7-15(4)(k), which excludes amounts paid under the federal Social Security Act along with Railroad Retirement and federal Civil Service. The Department's FAQ answers the question directly: 'No.

Does Mississippi tax 401(k) or IRA withdrawals? Exempt, but only once the plan's retirement requirements are met — this condition is the whole story and most summaries flatten it. The Department states: 'Generally, retirement income, pensions and annuities are not subject to Mississippi Income tax if the recipient has met the retirement plan requirements. Early distributions are not considered retirement income and may be subject to tax.' The instruction booklet is sharper: 'Pensions and annuities that are taxable as early or excess distributions under the Federal Internal Revenue Code (see Federal Form 5329) do not qualify for exemption from Mississippi income tax.' Mississippi never states an age. It piggybacks the federal determination, so the right test is 'is this an early distribution on federal Form 5329?', not 'is the taxpayer 59 and a half?' — which means every federal section 72(t) exception (age-55 separation, substantially

What about pensions — private, government, or military? A $50,000 pension costs $0 if private, $0 if a government pension, and $0 if military retired pay.

What does retiring in Mississippi actually cost? Income tax of $0 on the typical profile, plus about $1,852 of property tax and $4,445 of insurance on the median home — $6,297, which is 13th of 50.

Is Mississippi a cheap state to retire in? On these three lines it ranks 13th of 50. Whether that makes it cheap for you depends far more on the house than on the tax code.

Does the exemption phase out? Yes. It is worth most at a modest income — $0 — and nothing by the affluent profile, where the bill is $868.

What does a Roth conversion cost in Mississippi? An extra $0 in state tax on $50,000 converted, and $0 on $100,000. The federal tax on the conversion is unchanged and still due.

Does part-time work get taxed differently from my 401(k) withdrawals? Yes — and the gap is large. $20,000 of earnings costs $68 here while $100,000 of plan distributions costs $0, because Mississippi exempts retirement income and taxes wages.

Would a neighbouring state be cheaper than Mississippi? Tennessee is the cheapest of Mississippi and its neighbours at $6,215 against Mississippi's $6,297.

Do required minimum distributions change if I move here? No. The required amount is a federal calculation and identical in every state. What changes is what the distribution costs once taken.

Does this article include local income tax? No local income tax applies to retirement income in Mississippi on the figures used here.

Will Mississippi's treatment still apply in ten years? State legislatures revise retirement taxation regularly — several states have changed theirs in the past three years. Figures here are for tax year 2026 and are worth re-checking before a move.

What to do next

Two numbers decide this and neither is the one in the headline: your county's actual property tax rate, and a real insurance quote on a real address.

• Retirement state tax calculator — what any state charges on your income, cited per state
• RMD calculator — the distribution you must take, which no state changes
• Home insurance premium estimator — the line this article says decides it
• The Relocation Tax Playbook — establishing domicile, and the states that contest it