It has been around 45 years since a U.S. state last removed its income tax on wages and salaries. However, Mississippi and Kentucky are now moving towards eliminating their income tax if their economies continue to grow. This move is part of a broader trend of tax reductions seen across states following the COVID-19 pandemic.

There is some concern regarding the possible impact of President Donald Trump's cost-cutting measures and tariffs on federal funding for states and the overall economy. Additionally, fiscal analysts warn that relying solely on other taxes, such as sales tax, following the repeal of income taxes could disproportionately affect low-income individuals.

The authority for levying income taxes comes from the 16th Amendment to the U.S. Constitution, ratified in 1913. While most states have implemented their own income taxes, there are currently eight states that do not tax personal income. Mississippi is now working towards gradually reducing its income tax rate from 4% to 3% by 2030, with the aim to completely eliminate the tax by 2040 if certain revenue benchmarks are met annually.

The proponents of eliminating income tax in Mississippi believe it will attract businesses and residents, boosting the state's economy and tax revenues through increased consumer spending. However, removing income tax can be challenging for states that have become reliant on this revenue source over time.