Retirement income exempt
How Mississippi taxes retirement income
Mississippi exempts retirement income from state income tax. State law and the Department of Revenue’s rules exempt retirement allowances, pensions and annuities from any federal, state or private retirement system, along with Social Security and Railroad Retirement. The exemption carries over to a spouse or other beneficiary after the retiree dies.
Withdrawals from IRAs, Keogh plans and other tax-deferred plans count as retirement income too. Deferred compensation, such as a 457(b), qualifies as long as you meet your plan’s age, service or other retirement conditions when you take it.
The catch is early withdrawals. Money taken out of a retirement plan before you qualify to retire is taxed by Mississippi, though the state adds no early-withdrawal penalty of its own. Wages, interest, dividends and capital gains are taxed normally.
Questions
Does Mississippi tax PERS pensions?
No. Pensions from the Public Employees’ Retirement System of Mississippi and other public and private plans are exempt.
Are IRA withdrawals taxed in Mississippi?
Not once you qualify as retired. Early distributions are taxed, without a separate state penalty.
Does Mississippi tax Social Security?
No. Social Security benefits are exempt.