Moving from Canada to Mississippi: A Flat Tax Falling Toward Zero, Military Bases, and Shipbuilding

Mississippi's Gulf Coast hosts Ingalls Shipbuilding and Keesler Air Force Base, its interior hosts Toyota and Nissan plants, and Jackson has the state's healthcare and university employers. Canadians arrive through shipbuilding, defence, auto manufacturing, and healthcare. Mississippi's tax picture is a flat income tax that a 2025 law is stepping down toward 3% and eventually toward zero, a flat 7% sales tax, low property tax, and no estate tax.

Key takeaways

• Mississippi's flat income tax is 4% for 2026 and scheduled to fall to 3% by 2030, with further cuts tied to revenue triggers.
• No city income tax.
• Sales tax is a flat 7% statewide, with a 1% local addition in Jackson and a few other cities.
• Property tax is near 0.7% effective with a homestead exemption.
• No estate tax. Retirement income is fully exempt from Mississippi tax.

The Canadian departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the day you leave. Canadian real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 to defer tax on illiquid assets. The rate is your province's: on a $300,000 unrealized gain, roughly $72,000 from Alberta and $80,000 from Ontario, Quebec, or BC. Provincial health coverage ends around your departure date; confirm the exact date with your plan and arrange US coverage to start the same month.

US federal side

Dual-status return in the arrival year, FBAR on Canadian accounts above $10,000 aggregate, Form 8938 above thresholds, and the RRSP treaty deferral federally. The TFSA loses its tax-free status the day you become a US person; close it before crossing. Equity compensation vesting after the move is split by working days between Canada and the US.

Mississippi's side

Flat income tax of 4% for 2026, stepping down under the 2025 law to 3% by 2030 and potentially lower; no city income tax; 7% state sales tax with a 1% local addition in Jackson and a few other cities; property tax near 0.7% effective with a homestead exemption; no estate tax. Mississippi starts from its own definitions with broad federal conformity and fully exempts retirement income (pensions, IRA and 401(k) distributions, Social Security).

The RRSP

Federally deferred under Article XVIII of the treaty. Mississippi's treatment of treaty-deferred RRSP growth should be confirmed and documented; the state fully exempts retirement income, which covers RRIF withdrawals and Canadian pension income once the account is in payout. Canadian withholding is 25% on lump sums, 15% on periodic RRIF payments within the treaty limit, with a US foreign tax credit federally.

Who makes this move

Nova Scotia and Newfoundland shipbuilding and marine engineers to Ingalls Shipbuilding in Pascagoula, Canadian defence contractors to Keesler AFB and the Gulf Coast bases, Ontario auto engineers to Toyota Blue Springs and Nissan Canton, and Canadian healthcare professionals to the Jackson health systems.

Worked example

A Halifax naval engineer moves to Pascagoula on June 30 with $150,000 of unrealized gain in a non-registered account, $400,000 in an RRSP, and a Halifax home sold in the departure year.

• Departure tax. $150,000 gain, $75,000 taxable, at Nova Scotia's roughly 54%: about $40,500.
• Home. Sold as a resident under the principal residence exemption.
• RRSP. Federally deferred; Mississippi position documented; RRIF income later exempt as retirement income.
• Pascagoula. Combined top rate about 41%. HST 14% becomes sales tax 7%. Property tax on a $350,000 home around $2,500.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

"Generally, retirement income, pensions and annuities are not subject to Mississippi Income tax if the recipient has met the retirement plan requirements." — Mississippi Department of Revenue, Individual Income Tax Frequently Asked Questions, https://www.dor.ms.gov/individual/individual-income-tax-frequently-asked-questions

"You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that." — Internal Revenue Service, Substantial Presence Test, https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

Practitioner note

Mississippi's full exemption for retirement income makes it one of the better states for a Canadian retiree on paper, and its falling flat rate helps working movers. The 2025 law's revenue triggers mean the rate schedule can change; we confirm the current-year rate before modelling.

See also: Weighing Florida instead? See the Canada-to-Florida guide. Browse every corridor by city, province, and state.

Next step

Fairlight prepares the Canadian departure return, the first-year federal and state returns, and ongoing cross-border filings. See cross-border pricing or book a call.