The Senate's latest proposal includes what House leaders have been requesting for months: a path to eliminating the state income tax. That path involves triggering further tax cuts over a number of years when state revenue collections exceed budgeted spending. 

House Speaker Jason White says he’s encouraged by the Senate making that concession and he's open to including growth triggers in a final bill. However, White doesn’t want state spending to be part of that equation. 

“We want to be sure whatever trigger is there is one that is not meant to allow legislators to manipulate the numbers where we don't hit it in certain years,” White said. “It needs to be based on what is true revenue growth in our economy, and if we have the growth, we should have the cut.”

Senate Finance Chairman Josh Harkins says the upper chamber is not going to support a plan that eliminates the income tax by adding to the state’s debt, and that not accounting for spending would be fiscally irresponsible.

“Spending is a part of it that I think we need to make sure we keep under control,” Harkins said. … “If the Speaker is worried about that, then he can certainly vote no on a spending bill and the spending won't occur.”

Disagreements over sales tax, PERS 

Alongside disagreements over how aggressively to cut the income tax, potential changes to the sales tax rate and The Public Employees' Retirement System of Mississippi, or PERS, have emerged as major sticking points in negotiations.

The House plan eliminates the income tax by 2037 but also raises the sales tax to 8% to help offset that lost revenue. White argues the increase would still leave Mississippi’s sales tax rate lower than surrounding states, but Harkins says that's a non-starter for the Senate.

“I think if you add sales tax to it, I don't think we have the votes,” Harkins said. “Members have told me that that's just a bridge too far for them.”

The Senate tax bill would not have passed Tuesday if four Democrats hadn’t voted with the Republican majority.  So while House leaders see the wide support their plan has received from their members as a source of leverage in negotiations, Senate leaders see the same in the weakness of their coalition supporting income tax elimination. 

Both chambers also have different priorities for tackling the $25 billion in unfunded liabilities accrued by PERS.

The Senate’s tax bill includes creating a new, fifth tier of retirement benefits for state employees hired after February 2026. Instead of a traditional pension plan, those employees would operate under a hybrid model, with some of their retirement savings going to a 401(k)-style Defined Contribution plan, 

The end result of that shift would be a significant reduction in the value of PERS benefits when compared to those of current employees and retirees. Senate leaders say the current benefit structure is unsustainable, and this new tier will keep the system’s unfunded liabilities from ballooning further. 

“As we used to say in Mississippi, “when you're in a hole, stop digging,’” Lieutenant Governor Delbert Hosemann said. “That's what tier five does for us.”

The House plan would put $100 million of lottery revenue into PERS annually. Speaker White said he’s open to changing the structure of PERS, but only if lawmakers agree on a dedicated stream of revenue for reducing the system’s unfunded liabilities. 

“We're not totally against that (tier five), but if it doesn't come with additional revenue, it doesn't do a lot of good,” White said.

Democrats warn of future harm

Legislative Democrats have been critical of the Republican majorities' tax cut proposals, arguing the implementation of either will eventually lead to cutting government services in ways that hurt the poorest residents of the poorest state.

Before the Senate’s plan was advanced out of committee, Sen. Hob Bryan argued that the state has too many unmet needs to justify cutting taxes and that eliminating the income tax would mostly benefit large corporations.

“I know the snake oil salesmen who showed up in Mississippi selling this bill of goods must be laughing uncontrollably that they've put this one over on the rubes in Mississippi,” Bryan said.

During a Tuesday press conference, House Minority Leader Robert Johnson said that for the vast majority of Mississippians, the additional money they’d keep due to income tax elimination is not worth future cuts to public education, health and safety. 

“The best thing that could happen for the state of Mississippi is these two sides continue to butt heads and they don't do the damage they're set out to do,” Johnson said. 

Democrats have also warned that reductions in federal spending under the Trump Administration could make it impossible to fund core government services without income tax revenue. Mississippi is one of the most federally-dependent states, receiving around $2.60 in government funding for every $1 of federal income tax paid in the state. 

Timeline for negotiations

Now that both chambers have passed revised tax bills, both bodies will likely send the issue to a conference committee so three lawmakers from each chamber can work out a final agreement. 

If lawmakers fail to reach a compromise by a March 29th deadline, they could suspend legislative rules to buy more time. If that doesn't happen, Gov. Tate Reeves could call a special session on taxes to keep lawmakers in Jackson.

White said he doesn’t want to see that outcome but would welcome it if that became the only way to get income tax elimination done this year.

“I’m overly optimistic that we're going to get a deal done, White said. “ If we don't, maybe the governor will call us here in a special session, shine a real hot spotlight on it, and we will see where we can get in that environment.”