Delbert Hosemann is shedding some of his normally cautious approach to Mississippi’s finances as he eyes a possible run for governor in two years.
The lieutenant governor, during his speech at the Neshoba County Fair last week, said he will be pushing next year for a significant income tax rebate – just months after the Legislature enacted a plan to gradually eliminate the income tax.
Hosemann is advocating a 15% across-the-board rebate on the taxes that Mississippians paid on their 2023 income. He estimates the cost of the rebate at $315 million, an amount he says the treasury can handle given its large current surplus and the billion dollars in debt the state has paid down.
This is not the first time that Hosemann has pitched a tax rebate.
About three years ago, he advocated a rebate of up to $500 per taxpayer rather than cutting the tax rate further. At that time, he warned it would be imprudent, until the effects of two previous major income tax cuts were better understood, to add anything more than a onetime break for taxpayers. He also warned that the more cautious approach would lessen the potential budgetary trauma that would occur when the state’s economy goes through a downturn.
Hosemann’s cautiousness made sense back then, and it makes even more sense now. Such caution, though, would now advise against a rebate because it would be coming in addition to tax cuts upon tax cuts, not instead of them.
It was only months ago that Hosemann tried to slow down the tax-cutting train by countering the House’s aggressive proposal with a more moderate one. However, thanks to what was blamed on a typo, the Senate passed a bill during the final days of the 2025 session that gave the House and Gov. Tate Reeves what they wanted: total elimination of the personal income tax over the course of the next decade. The House declined to give the Senate an opportunity to fix its error. Thus, as things now stand, Mississippi is on course to eliminate about a third of the general fund revenue that pays for government operations.
Chances are Mississippi will need in the next year or two a chunk of the surplus that Hosemann’s rebate plan would reduce. Tax collections, which had been so robust after the pandemic, are showing signs of tapering off, even with several rounds of tax cuts yet to take effect. The latest economic numbers suggest that the recession this nation has been able to avoid for longer than normal may be coming by 2026, especially if President Donald Trump stubbornly clings to his high and erratic tariff policies.
Plus, Mississippi has some big-ticket items it will be facing. Lawmakers want to give schoolteachers another significant pay raise. Federal cuts in spending for health care, education and other areas are going to force the state to either make up the difference or reduce services. Plus, there remains the unsolved problem of a seriously underfunded Public Employees’ Retirement System.
For several years, the Mississippi Legislature has thrown caution to the wind, often ignoring the advice of Hosemann to go slow with reducing revenue. Eventually, the wind is going to change direction and start blowing back. Adding a $315 million rebate on top of all the layers of recent tax cuts will not help prepare for that time.
A rebate such as Hosemann is proposing was a reasonable idea a few years ago. With everything that has transpired in the meantime, though, it no longer is.
