Mississippi and Kentucky may become the first states to end personal income taxes since 1980

Two U.S. states, Mississippi and Kentucky are on a path to eliminate their income tax on wages and salaries, marking the first time in 45 years that a state is taking this step. The move is part of a larger trend of tax cuts across states following the COVID-19 pandemic. However, some fiscal analysts warn that reliance on other levies, such as sales taxes, could disproportionately affect the poor. Mississippi’s income tax is set to be eliminated by 2040 if revenue growth benchmarks are met each year. Supporters hope that eliminating the income tax will attract businesses and residents, boosting the state’s economy. Kentucky has also passed legislation to reduce its income tax rate with revenue-based triggers, which led to disagreements between the Democratic governor and Republican-led legislature. Other states such as Oklahoma and Missouri are considering similar measures to repeal income taxes, following the lead of Tennessee and New Hampshire, which recently ended taxes on certain types of income.

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