MississippiHB 12025 Regular SessionHouseWALLET

"Build Up Mississippi Act"; create.

Sponsored By: John Thomas "Trey" Lamar (Republican)

Signed by Governor

Ways and MeansFinance

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Bill Overview

Analyzed Economic Effects

21 provisions identified: 9 benefits, 6 costs, 6 mixed.

Lower income taxes for Mississippi households

The tax rate on Mississippi taxable income above $10,000 falls to 3.75% in 2027, 3.5% in 2028, 3.25% in 2029, and 3% in 2030. Starting in 2031, further cuts require a fully funded Working Cash-Stabilization Reserve Fund and a revenue surplus. Adjusted General Fund collections must exceed the following fiscal year's appropriations by specified shares of the estimated cost of a 1% tax cut: 0.85% to below 1% triggers a 0.2-point cut; 1% to below 1.15% triggers 0.25 points; and 1.15% or more triggers 0.3 points. Each cut starts the calendar year after the fiscal year used for the calculation. Rates cannot fall below zero, and the income tax ends when its rate reaches zero.

Spouses face tighter public pension rules

Survivor rules change for spouses of public retirement system members who join on or after March 1, 2026. When a member dies before retirement without a Pre-Retirement Optional Retirement Form, the service test uses retirement eligibility at 62 instead of 60. The spouse must have been married to the member for at least one year, and the member must have the required minimum service. The applicable pension formula determines payment, with a reduction when death occurs before eligibility for a full, unreduced allowance. Another option exercised by the member can also prevent eligibility through this route.

College retirement participants contribute nine percent

Beginning July 1, 2025, each participant in Mississippi's optional retirement program contributes 9% of total earned pay each month. The required contribution leaves less current take-home pay while funding retirement savings. The amount depends on monthly earned compensation.

New public workers face pension rules

Members joining on or after March 1, 2026, qualify at age 62 with eight membership-service years, or any age with 35 creditable-service years. Those leaving earlier with eight membership-service years can start benefits at 62 only if they do not take a contribution refund. The annual pension formula is 1% of average pay per service year, unreduced at 65 with eight membership-service years, at 62 with 30 creditable-service years, or at any age with 35. For retirement at 62 with fewer than 30 creditable-service years, an actuarial reduction uses the smaller shortfall from 30 service years or age 65. Average pay uses the greater of the eight highest consecutive years or the last 96 consecutive months of reported earned pay.

New public workers get hybrid retirement

Employees joining Mississippi's Public Employees' Retirement System on or after March 1, 2026, enter a combined pension and savings-account plan. Their required 9% employee contribution splits into 4% of earned pay for annuity savings and 5% for the defined contribution account. Members immediately own their defined contribution benefits and choose among board-approved investments; employers can add contributions within federal pretax limits. Employer monthly payments otherwise go to the accrued liability fund, subject to the act's Section 15 exception. The retirement board can charge plan operating expenses against the employer contribution rate, capped at 0.2% of participant pay.

College retirement accounts gain funding options

Beginning July 1, 2025, optional retirement program employers can make extra contributions to participants' contracts or accounts. These payments are voluntary and cannot exceed federal limits. The law also repeals authority to deduct up to 2% of employer contributions for administering the higher-education optional retirement program. It does not state how much was previously deducted or guarantee a specific account increase.

New public workers avoid credit wait

Public retirement system members joining on or after March 1, 2026, avoid a specified eight-year contribution requirement. That requirement applies to otherwise eligible service credit that needs no member contributions. Earlier members remain subject to the eight-year requirement. New members must still have service eligible for this type of credit.

More fuel-tax money for Mississippi roads

Starting September 15, 2025, monthly State Aid Road Fund deposits equal the greater of 23.25% of specified fuel-tax proceeds or a dollar minimum. That minimum is $5 million through August 2026, $6.5 million through August 2027, and $8 million afterward. After authorized expenses, counties share the money using equal shares, rural road mileage, and rural population. Beginning July 1, 2027, covered fuel-tax receipts above 18 cents per gallon go 23.25% to state aid roads, 2.75% to the Strategic Multi-Modal Investments Fund, and 74% to the state transportation department. The department must use its share for highway, bridge, and operational improvements following the Transportation Commission's three-year project schedule.

New legislators lose supplemental retirement eligibility

The listed Supplemental Legislative Retirement Plan membership category covers legislators and the Senate president elected after July 1, 1989, but before March 1, 2026. Those elected on or after March 1, 2026, are excluded from that category. This cutoff does not change eligibility for the general public employees' retirement system.

New public retirees lose payment options

Public retirement system members joining on or after March 1, 2026, do not receive the statutory additional annual benefit. The Legislature can still authorize an extra benefit for a specific year. These members also cannot choose a partial lump-sum payment with their retirement benefit.

New public workers lose service credits

Public retirement system members joining on or after March 1, 2026, lose several ways to count extra retirement service. Unused leave does not count, including for elected officials who join on or after that date. New members cannot use the rule allowing up to five years for qualifying out-of-state public work or American overseas dependent schools. They also lose credit under the unpaid professional-leave rule. They cannot use the option allowing up to ten years for specified local-government or related agency work, previously available by paying its actuarial cost.

Returning public workers lose earlier service

Former public retirement system members who took refunds and rejoin state service on or after March 1, 2026, cannot repay those refunds. They cannot receive service credit for work before March 1, 2026. Those who withdrew annuity savings before that date are treated as new members when they return on or after it. The same new-member treatment and loss of earlier credit apply to former supplemental legislative plan members who withdrew and received refunds before that date.

College retirement funding differs by hire

Beginning July 1, 2025, optional retirement participants employed earlier have 14.9% of earned pay directed to their contracts or accounts. For participants employed on or after that date, employers choose the account payment, up to 9% of pay. Another 0.2% goes to the public retirement system's expense fund, with remaining employer contributions going to accrued liabilities. Below a 9.75% employer contribution level, liability payments shrink; account payments are not reduced until the level falls below 9%. When the liability contribution is reduced or discontinued, the corresponding amount goes to participant contracts or accounts.

Higher fuel taxes with later adjustments

Gasoline, undyed diesel, and covered special-fuel taxes rise from 18 cents per gallon to 21 cents on July 1, 2025. They rise to 24 cents on July 1, 2026, and 27 cents on July 1, 2027. At the later date set by Section 65-39-35, the stated rates become 14.4 cents for gasoline and 14.75 cents for covered diesel and special fuels; other special-fuel rates stay unchanged. Beginning July 1, 2029, rates adjust every other year using the National Highway Construction Cost Index against its 2025 annual average. Rates are rounded to the nearest cent, increases are capped at one cent per net gallon, and the Department of Revenue must notify covered fuel businesses by March 1. Distributors and other liable parties remit the tax; household price changes depend on how much is passed through.

Lower state taxes on qualifying groceries

Beginning July 1, 2025, the state tax on qualifying groceries bought without SNAP benefits falls from 7% to 5%. Eligible food and drink must qualify for the exemption that applies when purchased with SNAP benefits. This saves $2 in state tax for every $100 of qualifying purchases. Purchases paid for with SNAP benefits remain outside this tax.

Cities gain more infrastructure spending options

Municipal fund assistance can now pay to acquire or rehabilitate buildings in municipalities. Cities can also buy property or equipment for allowed road, bridge, water, or sewer purposes. The fund still cannot pay for construction or maintenance of public buildings or structures not integral to the road and bridge system.

Sales-tax revenue supports eligible public colleges

Starting with distributions due September 15, 2025, eligible public colleges receive sales-tax shares from campus businesses outside city limits. This covers state institutions of higher learning and community or junior colleges. Colleges receive 18.5% of qualifying revenue outside Section 27-65-17(1)(n) and 25.9% of revenue under that section. The money goes to institutions; the law does not promise lower tuition or direct student payments.

Sales-tax shares repay county redevelopment debt

Beginning September 15, 2025, eligible counties receive project-area sales-tax shares solely to repay redevelopment debt. Locations must be in a county bordering both Mississippi Sound and Alabama, or within two miles of Interstate 10 and Menge Avenue in Harrison County. The county must have outstanding redevelopment bond debt and an existing or planned development worth at least $10 million. The county must certify eligibility, bonded debt, and the expected payoff date, and the Department of Revenue must approve. Shares are 18.5% of specified revenue outside Section 27-65-17(1)(n) and 25.9% under it; payments enter the tax-increment financing fund and end when the debt is paid.

Sales-tax shares support cities and Jackson

Starting with distributions due September 15, 2025, municipalities receive shares of qualifying sales-tax revenue from businesses within their limits. They receive 18.5% of revenue outside Section 27-65-17(1)(n) and 25.9% of revenue under that section. For an unincorporated county seat, the county receives these shares for road, bridge, and street construction or maintenance. Jackson business revenue also supports the Capitol Complex Improvement District Project Fund: 9% outside that section and 12.6% under it. These payments go to governments and the project fund, not directly to households.

Voter-approved local taxes on qualifying groceries

A city with at least 150,000 residents under the latest federal decennial census can adopt a special sales tax up to 1%. At least three-fifths of voters casting ballots in the required election must approve it. The authority includes qualifying food bought without SNAP benefits, subject to the law's requirement covering activities taxed at 7% or more. Eligible food must qualify for the exemption available when purchased with SNAP benefits. The tax authority ends July 1, 2035.

Use-tax revenue shifts to dedicated funds

Beginning September 15, 2025, two special funds each receive a share of covered monthly use-tax revenue. Each receives 15% of revenue outside Section 27-65-17(1)(n) and 21% of revenue under that section. The receiving funds are established under Section 27-67-35(1) and (2). These rules redirect state revenue rather than provide household payments.

Sponsors & Cosponsors

Sponsor

John Thomas "Trey" Lamar
Republican • House

Cosponsors

C. Scott Bounds
Republican • House
Billy Adam Calvert
Republican • House
Clay Deweese
Republican • House
Dan Eubanks
Republican • House
Jeff Hale
Republican • House
Justin Keen
Republican • House
Steve Massengill
Republican • House
Gene Newman
Republican • House
Troy Smith
Republican • House
Jody Steverson
Republican • House
Jason White
Republican • House

Roll Call Votes

All Roll Calls

Yes: 211 • No: 67

House vote • 3/20/2025

Concurred in Amend From Senate

Yes: 91 • No: 27 • Other: 2

Senate vote • 3/18/2025

Passed As Amended

Yes: 32 • No: 16 • Other: 3

House vote • 1/16/2025