The Senate voted Monday evening to pass a tax cut that reduces the state income tax and the sales tax on groceries while raising the gasoline tax, setting up negotiations with the House.

The measure passed the GOP-majority Senate 34-15, with four Democrats supporting it and four Republicans opposing it. It now heads to the House, whose leadership is advocating for its own plan, which would eventually eliminate the state individual income tax.

The Senate plan amounts to a net tax cut of $326 million, a more modest sum than the $1.1 billion net cut passed by the House. The Senate would reduce the state’s flat 4% income tax to 2.99% over four years, while the House would eliminate the income tax over more than a decade.

Senate Finance Chairman Josh Harkins, a Republican from Flowood, told reporters that the legislation was a responsible way to cut taxes while slightly increasing the gasoline tax to provide more revenue for infrastructure funding. 

“I think we’ve put forward a really good plan that helps families at the grocery store by lowering the sales tax on groceries,” Harkins said. “And it provides incentives and rewards work.” 

The Senate plan would reduce the state’s 7% sales tax on grocery items, the highest in the nation, to 5% starting July 2025. Municipalities receive a portion of grocery tax revenue, and the Senate plan would make cities whole. 

The Senate bill would raise the state’s 18.4-cents-a-gallon gasoline excise by three cents yearly over the next three years, eventually resulting in a 27.4 cents-per-gallon gas tax at completion. This is an effort to help the Mississippi Department of Transportation with a long-running shortfall of highway maintenance money.

Most of the chamber’s Democratic members opposed the plan over fears that the state could not afford to wipe out around half a billion dollars each year from its budget and still address some of the state’s critical issues such as public education and health care. 

“That’s a lot of money, and we need that money for basic infrastructure,” Democratic Sen. Hob Bryan of Amory said. “Everyone benefits from infrastructure.”

Some Democratic members attempted to amend the bill to eliminate the grocery tax or change the tax structure to avoid increasing the gas tax. But the GOP-majority chamber on party-line votes defeated the amendments. 

Four Republican senators voted against the final measure because it raised the gasoline tax, something they viewed as going against the GOP’s core ideology. 

Sen. Angela Burks Hill, a Republican from Picayune, told reporters the gas tax increase would hurt rural people the most because they have to drive further for work and to purchase groceries. 

“I’m just trying to follow my party’s platform of low taxes,” Hill said. 

Now that both chambers at the Capitol have passed separate tax proposals, the key question will be how much legislative leaders can compromise on a final package. House Speaker Jason White, a Republican from West, and Republican Gov. Tate Reeves have said abolishing the income tax is their primary goal this session. 

White previously told Mississippi Today that he’s willing to compromise with the Senate, but he wants a final tax cut that’s substantive and meaningful. 

“We’re not interested in a small piece of a tax cut while not addressing other issues,” White said. 

Reeves has thrown cold water on the Senate’s proposal because it doesn’t entirely eliminate the income tax. If lawmakers can’t agree on a proposal, he could call them into a special session to address taxes. 

Harkins, though, said he hopes lawmakers can “build consensus” on a final package during the regular session. House and Senate leaders will likely debate the measure for the next month. The deadline for lawmakers to approve tax and appropriations bills is March 31. 

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