2021 is a year of big changes. Law360 has recently published an article about the Federal Tax Cases to watch in the new year that can be found here. However, to switch gears for a bit, this blog post is about the proposed changes in Arkansas and Mississippi.
Currently, there are nine states that are considered no-income states, with Tennessee becoming a true no-income state as of January 1st. Because there is a large population number moving into the lower income tax states over the past ten years, some locations offered phasing out to hold onto their residents.
In Arkansas, Lt. Gov. Griffin suggests that phasing out income tax will make the state more competitive, reinvigorate the local economy, and help small businesses. Arkansas is bordered by Tennessee and Texas, both of which offer a more attractive income tax climates. To remain competitive, the state has relieved 1.3 million residents of more than $250 million in liability since 2015. As of January 1, 2021, the top individual rate is now 5.9%. To stay up to date, you can peruse the official Arkansas governor's website here.
In Mississippi, Gov. Tate Reeves started the conversation about the phase-out by 2030. Currently, the highest rate is 5%. The 3% rate will be phased out by 2022. In addition to that, the franchise tax will be repealed by 2028. More information can be found via the news section of any main search engine.
In conclusion, when there is a low or non-existent income tax, one must remember to pay attention to sales, property or corporate taxes before making a final decision.