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Taxes are sweeter in the Magnolia State

The tea is sweet in the Magnolia State and so is the not-so-heavy tax burden.

In fact, Mississippi is one of the top 10 most tax-friendly states, and is home to some of the cheapest property taxes in the nation, according to a recently released report from Kiplinger.com.

The financial savvy website picked Mississippi for several reasons.

The state income tax is just 3 percent less than $5,000 of income and 5 percent on more than $10,000 of income. Mississippi’s income tax rate kicks in early, resulting in an effective tax rate of 4.6 percent for single filers and 4.9 percent for married filers. Beginning in 2018, however, income tax rates will gradually be reduced. By 2022, the first $5,000 of taxable income will be exempt.

Gas taxes are 3 cents per gallon lower than in neighboring Louisiana, where gas taxes are also low. Mississippi’s tax rate is 18 cents a gallon for all motor fuel, including gasoline, plus 0.4 for environmental protection for an overall rate of 18.4 cents per gallon. Another plus: gasoline purchased in Mississippi is not subject to sales tax, according to the Department of Revenue.

The property tax in Mississippi for a median home value of $104,000 is $854, the 19th-lowest in the nation, Kiplinger reported.

In Lincoln County, the median home value is $84,200, according to the 2010 Census. Homeowners can expect to pay a property tax anywhere from 1.03 percent to 1.47 percent, depending on where they live in the county, said Lincoln County Tax Assessor Blake Pickering.

“Everything that is charged ad valorem tax is affected by which of the three taxing districts you live in,” he said.

For example, residents inside the city limits would pay 1.47 percent, or $1,470 in taxes on a $100,000 home. Those living in the separate school district — within the Brookhaven School District but outside the city limits — pay 1.1 percent tax, and those living in the Lincoln County School District pay the lowest, just 1.03 percent.

Vehicle sales are taxed at 5 percent, two percentage points below the general sales tax rate, so someone buying a $20,000 car would pay $1,000. Mississippi also charges an annual personal property tax based on vehicles’ age and value. Rates are set at the county level.

Other states may offer cheaper tags, Pickering said, but those same states may charge more for property taxes. “Everybody is going to get their taxes somewhere,” he said. “Overall, it’s lower here in Mississippi.”

There is no statewide lodging tax. Localities, however, can add their own lodging taxes, with none higher than 3 percent.

Rental cars will set drivers back a 6 percent tax plus the 5 percent sales tax.

Using that smartphone is a 9.1 percent tax.

There is no inheritance or estate tax in Mississippi.

Pickering has never lived anywhere but Lincoln County, but from talking to other tax collectors and assessors around the state, he’s happy to call this home.

“It’s a very fine line you have to walk between adequately taxing the community in order to pay for much-needed services,” he said. “We don’t want it to be an undue burden on people. Our Board of Supervisors are very conscientious about not increasing the burden on people unless it’s absolutely necessary. All of the county officials are.”

He said it doesn’t cost as much to live in Mississippi as other places. “It also helps, for the most part, that our cost of living is a lot lower than a lot of places,” he said. “We can stretch our tax dollars a little further and our income stretches a little further.”

Not all the taxes in Mississippi smell as sweet as a blooming magnolia. The state sales tax of 7 percent is the second-highest in the U.S. — only California, at 7.5 percent, — is higher, and Mississippi is one of a minority of states that charges sales tax on groceries. But there’s some good news, too. Besides gasoline, individuals will find that prescription drugs, residential utilities and newspapers — like your copy of the The Daily Leader — are all exempt.

Sin taxes vary in Mississippi. A sin tax is a state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. These types of taxes are levied by governments to discourage individuals from partaking in such activities without making the use of the products illegal.

Sin taxes in the state, according to Kiplinger, include:

Beer and hard cider: 43 cents per gallon (up to 6 percent alcohol)

Wine: 35 cents per gallon

Liquor: $7.74 per gallon

Cigarettes: 68 cents per pack

Other tobacco products: 15 percent of the wholesale price.