Updated October 5, 2026. Quick answer: Yes. Mississippi taxes interest and dividends once the zero-rate band is used: the booklet prints “Income Tax: 0% on the first $10,000.00 of taxable income and 4.4%” above it. Interest on U.S. and Mississippi obligations is exempt; other states’ bonds are taxable.
How Mississippi treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Taxed at the flat rate above the zero-rate band |
| Rate | 0% on the first $10,000 of taxable income; the Department’s FAQ says “the remaining taxable income is taxed at 4.4%.” |
| Where it is reported | Interest and dividends go on Schedule B |
| Exempt interest | “Interest income from obligations of the U.S. Government, the State of Mississippi” and its subdivisions is exempt |
| Other states’ bonds | “Interest on obligations of other countries, states, cities, or political subdivisions” outside Mississippi is taxable |
| Dividends | “Report all dividend income received regardless of the amount.” Schedule B removes “interest on federal obligations included with dividends reported” |
A $20,000 example
Taxable dividends and interest of $20,000 that sit above the $10,000 zero-rate band add $20,000 x 4.4% = $880 of Mississippi tax. If they were the only taxable income, only the part above the band is taxed: ($20,000 less $10,000) x 4.4% = $440.
What changes in 2026
The 2025 booklet prints reductions on income above $10,000 of “Tax Year 2027 Excess of $10,000 @ 3.75%”, then 3.5% for 2028 and 3.25% for 2029. It prints no tax year 2026 rate, so the 2026 rate is a gap in these documents.
Federal rules
The state’s treatment sits on top of the federal one. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether Mississippi taxes capital gains, whether Mississippi taxes pensions, how Mississippi taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- 2025 Mississippi Income Tax Instructions (Form 80-100-25): https://www.dor.ms.gov/sites/default/files/Individual/80100251.pdf
- Mississippi DOR Individual Income Tax FAQ: https://www.dor.ms.gov/individual/individual-income-tax-faq
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.