The work of the Mississippi Legislature has finally come to a close. The 2025 Regular Session of the Mississippi Legislature convened on January 7, 2025.
It was a headline-making session that included partial redistricting, tax reform, state retirement system changes, and, most notably, adjourning without having adopted a state budget. Legislators met during the last week of May for a special session to approve a state budget ahead of Fiscal Year 2026.

Redistricting:
After a federal court ruled the state legislative maps adopted in 2022 violated Section 2 of the Voting Rights Act, legislators entered the session tasked with redrawing districts. The Senate map (JR 202) impacted ten districts in the DeSoto County and Hattiesburg areas. The members impacted in the DeSoto County area are senators Kevin Blackwell (R), Reginald Jackson (D), Mike McLendon (R), David Parker (R), and Neil Whaley (R). The members impacted in the Hattiesburg area are senators Juan Barnett (D), Joey Fillingane (R), Chris Johnson (R), John Polk (R), and Robin Robinson (R). Rather than run again, Senator John Polk, has announced his retirement. The House map (JR 1) impacted five districts in Northeast Mississippi spanning across Chickasaw, Clay, Lee, Lowndes, Monroe, and Oktibbeha counties. The members impacted are representatives Karl Gibbs (D), Kabir Karriem (D), Jonathan Lancaster (R), Dana McLean (R), and Rickey Thompson (D).

On April 15, a federal court panel, in response to a challenge of the redrawn Senate seats in the Desoto County area and the redrawn House seats in Northeast Mississippi, issued a decision that approved the House plan. However, the panel ruled that the State Board of Election Commissioners (Board), comprising Attorney General Lynn Fitch, Governor Tate Reeves, and Secretary of State Michael Watson, had seven days to propose a new Senate map for the DeSoto County area. The Board issued a new plan on April 22, that increased the Black Voting-Age Population (BVAP) in Senate District 2, creating a new majority-minority district in the Northwest corner of the state, partly in Desoto County. The plan also amends the lines of Senate District 11, reducing its BVAP by more than 9%, but maintaining it as a majority-minority district. A panel of three federal judges approved the revised legislative redistricting plan from the Mississippi Election Commission on May 7, allowing the special elections to now move forward. Across the Senate and House maps, there is one district in each area of interest that switches to a minority-majority district. All races, except for one open seat in the Hattiesburg area, will include an incumbent, but no incumbents will have to run against each other. Candidate qualification to run will run from June 2-9 and the slate of candidates will be submitted by June 13. The primary election is slated to be held on August 5, with a potential primary runoff on September 2, and the general election on November 4.

Tax Reform:
HB 1, signed by the Governor on March 27, impacts sales tax on groceries, excise tax on gasoline, and state personal income tax. The sales tax on groceries will drop from 7% to 5% on July 1, 2025. The distribution of user tax will increase for local governments to help offset the loss of revenue from the sales tax reduction. The excise tax on gasoline will begin a 9-cent phase-in increase by 3 cents per gallon, per year in 2025, 2026, and 2027. Beginning on July 1, 2029, the excise tax rate will be indexed every other year. HB 1 marks the third bill passed by the legislature in the last ten years in an ongoing effort to phase out the state personal income tax. Under current law, the income tax rate for those making over $10,000.00 (≤ is exempt) will be down to 4.0% by calendar-year 2026. HB 1 picks up in 2027, with an initial rate of 3.75%. That rate will decrease to 3.5% in 2028, 3.25% in 2029, and 3% in 2030. Additional yearly cuts to the income tax rate, ranging from .2% to .3%, may occur thereafter if certain fiscal stability criteria are met and will continue until the state personal income tax rate is 0%.

Also included in HB 1 were changes to the Mississippi Public Employees Retirement System (PERS). While the true amount of unfunded liability for PERS is debatable, the legislature agreed that it is significant and needs to be addressed. Legislators agreed to changes across several state plans that they believe should slow the growth of future liabilities attached to public employees going forward. Starting on March 1, 2026, the Supplemental Legislative Retirement Plan will be closed to newly elected members of the House and Senate. All newly elected legislative members and newly hired state employees, except for Highway Safety Patrol, will be enrolled in Tier 5, a hybrid plan, with 5% of compensation being applied to a defined contribution plan and 4% of compensation being applied to PERS. Additionally, starting July 1, 2025, qualifying individuals hired by state institutions of higher learning (e.g., University of Mississippi Medical Center) that elect participation in the Optional Retirement Plan (OPR) will have a set participant and employer contribution rate of 9%, with portions of the employer contribution to the program used to offset the unfunded liability of PERS. The changes to the OPR, a program often used for attracting individuals to positions that are highly competitive across states, will result in a less powerful recruiting tool; leaving many to wonder its impact on our colleges and universities.

Budget:
Governor Reeves called for a special session to convene on May 28 for the Mississippi Legislature to finalize the state budget ahead of Fiscal Year 2026. Legislators passed 100-plus appropriation and revenue bills and approved a flat general fund budget of $7.135 billion for FY 2026. Appropriation of additional special revenue funds, such as the Education Enhancement Fund and the Capital Expense Fund, brought the total state support for FY 2026 to $7.861 billion. Due to this year’s discourse over specifics in the budget, no local projects were funded for FY 2026.

Though we tracked numerous pieces of legislation for the Mississippi Society of CPAs in 2025, the number one item was House Bill 1, which revamped Mississippi’s personal income tax law, as well as addressed the grocery tax, gas tax and the Public Employees’ Retirement System.

The Clay Firm wishes to express our gratitude for your continued partnership and looks forward to next year’s regular session that will begin on January 6, 2026.

-Stephen Clay - MSCPA Legislative Representative