In recent years as more states have lowered the tax on work and investment—the state income tax—Oklahoma has fallen behind in the nationwide race to attract investment and job creation.

The gap between Oklahoma and one of its state competitors became even greater this month as lawmakers in Mississippi voted to put their state income tax on a gradual path to elimination.

Mississippi currently has an income-tax rate of 4.7 percent, which is already lower than Oklahoma’s top rate of 4.75 percent, and the rate in Mississippi was scheduled to fall further to 4 percent in 2026.

But now, with the passage of Mississippi’s House Bill 1, that state’s income tax will continue to decline until it is no more.

The newly passed legislation will continue cutting Mississippi’s income-tax rate, lowering it to 3 percent in 2027, then cutting another three-tenths of a point each year until the tax is fully repealed, potentially achieving full elimination by 2037.

According to Americans for Tax Reform, Mississippi is now the 13th state to either have no income tax or put its income tax on the path to full repeal.

Mississippi officials hailed the income-tax repeal.

In a post made on X after the tax-repeal bill was approved by both chambers of the Mississippi Legislature, Mississippi Gov. Tate Reeves declared it a “a great day for Mississippi taxpayers” and “a day for celebration!”

In a separate post on X, Reeves noted he has the choice to either sign the bill “and end the tax on work,” or veto it, writing, “HINT: Option 2 AIN’T happening!!”

Mississippi Speaker of the House of Representatives Jason White similarly wrote, “As of today, we are Building Up Mississippi by eliminating the income tax to further our state’s competitive advantage and award our workforce!”

White called it “the most significant tax cut in Mississippi history.”

Mississippi Lt. Gov. Delbert Hosemann, who serves as president of the Mississippi Senate, called the bill’s passage “a defining moment in Mississippi’s history in providing transformative tax relief for Mississippi citizens.”

Mississippi State Rep. Trey Lamar, who led the charge to eliminate the state’s income tax, wrote, “The passage of House Bill 1 eliminating Mississippi’s individual income tax is a historic moment for our state. This monumental tax reform will reward the dignity of our people’s work and will benefit our children and grandchildren for generations to come.”

He noted the bill “fully phases out the income tax over the next 14 years.” 

The tax-repeal achievement of Mississippi policymakers did not go unnoticed in Oklahoma.

Gov. Kevin Stitt, who has called for putting Oklahoma’s income tax on a gradual path to full elimination, wrote on X, “More and more states are putting taxpayers first over government spending and special interests. Oklahoma needs to stay competitive and get on a path to zero. Less government, more prosperity. Hold the line, cut taxes, and keep Oklahoma moving forward.”

Members of the Oklahoma House of Representatives have advanced from committee legislation that would gradually eliminate Oklahoma’s tax on work and investment.

House Bill 1539, by state Rep. Mark Lepak, R-Claremore, would cut Oklahoma’s 4.75 percent personal income-tax rate by a quarter point each time that net state revenue increases by at least $300 million, continuing the process until the tax is completely repealed.

The bill currently awaits a vote on the floor of the Oklahoma House of Representatives.

Oklahoma’s current 4.75 percent personal income tax rate is among the highest in the region.

Texas has no personal income tax while Colorado imposes a 4.4 percent rate most years and recently provided a temporary reduction to 4.25 percent. Officials in Arkansas have cut their rate to 3.9 percent. The top rate in Missouri fell to 4.7 percent in January, leapfrogging Oklahoma. Louisiana has cut its income-tax rate to 3 percent and has a law in place to further cut the rate as revenue increases in future years.

Among bordering states, Kansas and New Mexico have higher personal income-tax rates than Oklahoma.

Five states with no personal income tax also have the same or lower effective property tax rates than Oklahoma.