Mississippi Reduces Sales Tax Rate on Groceries, Effective July 1, 2025

Effective July 1, 2025, the Mississippi Department of Revenue is reducing the sales tax rate on sales of groceries from 7% to 5%. The rate decrease on groceries is part of the recently enacted House Bill 1. Per the legislation, “groceries” refers to food or drink for human consumption that is eligible to be purchased with food stamps. Items purchased with food stamps will continue to remain exempt from sales tax. Items that are not eligible to be purchased with food stamps will remain taxable at 7%.

Affected retailers will want to adjust their systems accordingly to account for the change taking place on July 1, 2025.

For Mississippi retailers, beginning with the July 2025 tax return due in August 2025, report sales of groceries at 5% using rate code 40 on the sales tax return. Report other retail sales at 7% using rate code 74 on the sales tax return.

For out-of-state retailers, beginning with the July 2025 tax return due in August 2025, report sales of groceries at 5% using rate code 41 on the use tax return. Report other retail sales at 7% using rate code 75 on the use tax return. (H.B. 1, Laws 2025, effective July 1, 2025; Press Release, Mississippi Department of Revenue, May 1, 2025)