*This information was accurate at the time of writing. However, tax laws and deductions change frequently. Please verify eligible deductions with your accountant.
When it comes to taxes, everyone wants to maximize their deductions, and Mississippi is no different. With the right information and strategies, you can reduce your taxable income and minimize the amount of taxes you owe. In this blog post, we’ll discuss how you can maximize your tax deductions in Mississippi.
State Tax Deductions
In Mississippi, there are several state tax deductions available for taxpayers.
1. Mississippi Retirement Income Deduction: Mississippi residents can deduct up to $2,000 of their retirement income from federal, state, and local retirement plans. This deduction applies to residents who are age 65 and over, as well as those who are permanently and totally disabled.
2. Mississippi Charitable Contributions Deduction: Mississippi residents can deduct up to 50% of their adjusted gross income (AGI) on their state income taxes for charitable contributions made to qualified tax-exempt organizations. This includes contributions to religious, educational and charitable organizations, as well as contributions to the United Way.
3. Mississippi Home Mortgage Interest Deduction: Mississippi taxpayers can deduct the interest paid on their home mortgage loan from their state income taxes. This includes interest payments on primary and secondary residences, as well as refinanced mortgages.
4. Mississippi Sales Tax Deduction: Mississippi taxpayers can deduct up to 2.5% of their total sales tax paid in the state on their state income taxes. This includes sales tax paid on purchases of goods and services.
5. Mississippi Property Tax Deduction: Mississippi residents can deduct up to $250 of their property taxes from their state income taxes. This deduction applies to primary and secondary residences, as well as rental properties.
Federal Tax Deductions
In addition to the state tax deductions, Mississippi residents can also take advantage of several federal tax deductions.
1. Mortgage Interest Deduction: The mortgage interest deduction allows taxpayers to deduct the interest paid on their home mortgage loan from their federal income taxes. This deduction applies to both primary and secondary residences, as well as refinanced mortgages.
2. Charitable Contributions Deduction: Taxpayers can deduct up to 50% of their adjusted gross income (AGI) on their federal income taxes for charitable contributions made to qualified tax-exempt organizations. This includes contributions to religious, educational and charitable organizations, as well as contributions to the United Way.
3. State and Local Tax Deduction: Taxpayers can deduct up to $10,000 of their state and local taxes from their federal income taxes. This includes income taxes, property taxes, and sales taxes.
4. Student Loan Interest Deduction: Taxpayers can deduct up to $2,500 of the interest paid on their student loans from their federal income taxes. This deduction applies to both federal and private student loans.
5. Retirement Contributions Deduction: Taxpayers can deduct up to $6,000 of their contributions to qualified retirement plans from their federal income taxes. This includes contributions to Traditional and Roth IRAs, 401(k)s and other employer-sponsored retirement plans.
Tax Credits
In addition to the deductions mentioned above, Mississippi residents can also take advantage of several tax credits.
1. Earned Income Tax Credit (EITC): The EITC is a refundable tax credit for low- and moderate-income taxpayers. The amount of the credit is based on the taxpayer’s income and number of qualifying children.
2. Child and Dependent Care Credit: Taxpayers can claim a tax credit of up to $3,000 for the cost of childcare for a qualifying child or dependent.
3. Adoption Credit: Taxpayers can claim a tax credit of up to $13,750 for the cost of adopting a qualifying child.
4. Education Credits: Taxpayers can claim two education credits: the American Opportunity Tax Credit and the Lifetime Learning Credit. The amount of the credit is based on the taxpayer’s educational expenses and income.
5. Retirement Savings Contributions Credit: Taxpayers can claim a tax credit of up to $1,000 for their contributions to a qualified retirement plan.
Maximizing your tax deductions in Mississippi can help you reduce your taxable income and minimize the amount of taxes you owe. In this blog post, we discussed how you can take advantage of the state tax deductions, federal tax deductions, and tax credits available in Mississippi. We hope this information has been helpful and that you’re able to use it to maximize your tax deductions in the state.