Go to Retiree Tax Map Mississippi Add to State Compare List | View List View State Compare List (0) selected | Compare up to 5 The Bottom Line Most Tax-Friendly One of Kiplinger's top ten most tax-friendly states for retirees, the Magnolia State offers a sweet income tax deal for retirees. It not only exempts Social Security benefits from state income taxes, but it also excludes all qualified retirement income. Remaining income is taxed at a maximum 5%. Mississippi is home to some of the cheapest property taxes in the nation. Seniors qualify for a homestead exemption on the first $75,000 of value. State Sales Tax 7% state levy. Only two localties, Jackson (1%) and Tupelo (0.25%) add to that. According to the Tax Foundation, that makes for an average combined rate of 7.07% Income Tax Range Low: 3% (on taxable income of $1,000 or more)High: 5% (on more than $10,000 of taxable income)Income tax rates are being gradually reduced. By 2022, the first $5,000 of taxable income will be exempt. Social Security Benefits are not taxed. Exemptions for Other Retirement Income Qualified retirement income -- including income from IRAs, 401(k)s, 403(b)s, Keoghs, and qualified public and private pension plans -- is exempt from state income tax. (Early distributions are not considered retirement income and may be subject to tax.) Interest income from federal securities and obligations of Mississippi and its political subdivisions are all exempt. Railroad Retirement benefits are not taxed.IRAsExempt from state income tax. 401(k)s and Other Defined-Contribution Employer Retirement PlansExempt from state income tax. Private PensionsExempt from state income tax.Public PensionsExempt from state income tax. Property Taxes The state offers a homestead exemption of up to $300 for all eligible taxpayers. The median property tax on Mississippi's median home value of $104,000 is $854.Tax breaks for seniors: For homeowners 65 and older or totally disabled, there is an exemption on the first $75,000 of value. Vehicle Taxes Vehicle sales are taxed at 5%, which is 2% below the general rate. Mississippi also charges an annual property tax on vehicles based on their age and value. Rates for this tax are set at the county level. In Lafayette County, for example, you’d pay $285 on a vehicle valued at $20,000. Inheritance and Estate Taxes There is no inheritance tax or estate tax.