Overall, Mississippi has a relatively low tax burden. Its income tax system has a top rate of 5%. Income taxes are also progressive, which means higher-earning filers will pay more in taxes. There are no city or local income taxes in Mississippi.
No matter which state you work in, you need to pay FICA taxes. FICA taxes are made up of Social Security and Medicare taxes. Your employer withholds 6.2% of your wages for Social Security and 1.45% for Medicare from your paycheck. Your employer also matches those amounts so the total contributions are doubled. If you are self-employed, you have to pay the total 12.4% to Social Security and 2.9% to Medicare yourself (though you can then deduct half of those self-employment taxes). Any wages you earn in excess of $200,000, are subject to a 0.9% Medicare surtax, which employers do not match.
Money is also withheld from your paycheck for federal income tax. Instead of paying your taxes in one lump sum in April, you pay installments throughout the year. How much your employer withholds will depend on your earnings and what you put on your W-4 form. The W-4 form that you give your employer indicates your marital status, the number of allowances you're claiming and any additional tax withholding you want your employer to take from your paychecks.
Take note that withholding calculations changed for the 2018 tax year because of the tax plan that President Trump signed into law in December 2017. If you haven't already checked, look over your W-4 just to ensure the information is still accurate. If your W-4 is correct, you don't need to do anything.
Other money deducted from your paycheck depends on whether you opt to take advantage of benefits offered by your employer. If you have health or life insurance plans through your company, money to pay those premiums will come out of your paycheck. These payments are usually pre-tax, which means they are deducted before taxes are removed. This lowers the amount of money you actually have to pay taxes on. Some other pre-tax accounts that you may opt into include retirement accounts, like a 401(k) or 403(b) and medical expense accounts, such as a health savings account (HSA) or flexible spending account (FSA).
The Magnolia State's tax system is progressive, so taxpayers who earn more can expect to pay higher marginal rates on their income. You will be taxed 3% on the first $5,000 you earn in Mississippi, 4% on the next $5,000 (up to $10,000) and 5% on income over $10,000. The tax brackets are the same for everyone, regardless of filing status.
No cities in Mississippi charge local income taxes.
If you want to adjust the size of your Mississippi paycheck, you should start by looking at your W-4 form. Remember your W-4 is what employers use to determine how much should be withheld in taxes from each of your paychecks.
If you are concerned that you'll face a big tax bill come April, one option is to lower the allowances that you are claiming. It may seem strange to choose to get smaller checks throughout the year but you would owe that money in taxes anyway. The only difference is you're paying it out more consistently over time instead of with one massive annual bill.
Another option for decreasing your April tax bill is to elect to have your employer withhold an additional dollar amount from each of your paychecks. Simply decide how much you want withheld - for example, $20 per paycheck - and write that amount down on a new W-4. Our paycheck calculator will help you determine how much more you should withhold.
You can also save for retirement while reducing your taxable income by putting more money into pre-tax retirement accounts like a 401(k) or 403(b). Typically, 401(k) funds are not taxed until you withdraw money from the plan. But since Mississippi does not require retirees to pay state income tax on qualified income, the money in your 401(k) is never subject to state-level taxes if you retire in the state.
If you are thinking about a move to Mississippi and will be looking to purchase a home, our Mississippi mortgage guide can help ease some of the stress that comes with homebuying. It puts all the important information about rates and getting a mortgage in the Magnolia State onto one convenient page.