Bank Gap by State

The Bank Gap in Mississippi

Mississippi has the lowest cost of living of any state, which keeps the dollar stakes of the Bank Gap modest here even though the state's flat 5.0% tax applies to savings interest like any other income.

Big-bank average0.38%

Best available4.40%

$1,005/yrlost on a $25k balance · 4.02 pp spread

Last reviewed August 7, 2026 · SwitchWize Research Desk

Best savings APY

4.40%

high-yield

National average

0.38%

big-bank avg

APY gap

4.02 pp

spread

MS tax on interest

5.00%

top marginal rate

Before MS tax

$1,005/yr

on a $25,000 balance

After MS 5% tax

$955/yr

recoverable by switching

On a $25,000 balance, the gap is about $1,005 a year before tax. After Mississippi's 5% top income-tax rate on the additional interest, you keep about $955. Because Treasury interest is exempt from Mississippi income tax, routing that cash through a state-tax-exempt Treasury vehicle can recover most of the difference.

Estimated Bank Gap by balance

Estimated annual Bank Gap by balance at 0.38% current APY versus 4.40% better-fit APY, before and after MS state income tax
Balance	Current earnings	Better-fit earnings	Estimated Bank Gap	After MS tax
$5,000	$19	$220	$201	$191
$10,000	$38	$440	$402	$382
$25,000	$95	$1,100	$1,005	$955
$50,000	$190	$2,200	$2,010	$1,910
$100,000	$380	$4,400	$4,020	$3,819

Estimates over 12 months at 0.38% current APY and 4.40% better-fit APY. The "After MS tax" column applies MS's 5% top income-tax rate to the additional interest; federal tax applies on top and is not shown. Example only — your result depends on your balance, rates, and time horizon.

Why Mississippi changes the math

Mississippi taxes interest income at a flat 5.0% rate, with the state working toward a lower target rate under legislation phased in over several years. Treasury interest remains exempt from Mississippi income tax in the meantime.

The nation's lowest cost of living means a Mississippi emergency fund is typically a smaller dollar figure than almost anywhere else, though the percentage-point Bank Gap still applies in full to whatever that balance is.

Cost of living in Mississippi is the lowest in the country, which shapes how large an emergency fund needs to be and therefore how many dollars the Bank Gap quietly costs on idle cash.

After-tax tip

Because Mississippi taxes savings interest but not Treasury interest, the highest after-tax yield is not always the highest headline APY. Run your tax profile through the short-term savings tool to see whether a Treasury bill or government money market fund beats a taxable account for you.

Open the short-term savings tool

Frequently asked questions

Does Mississippi tax high-yield savings account interest?

Yes. Mississippi treats savings interest as taxable income, with a top rate of 5%. Interest from U.S. Treasury bills and the Treasury portion of a government money market fund is generally exempt from Mississippi income tax, which can change the after-tax winner for higher earners.

Is a high-yield savings account worth it in Mississippi?

Yes. Even after Mississippi state tax, moving cash from a national-average account to a top high-yield savings account still leaves you with substantially more interest. The Bank Gap is far larger than the state-tax drag on the additional interest.

Are T-Bills better than a HYSA for Mississippi savers?

They can be for higher earners. Because Treasury interest is exempt from Mississippi income tax, a T-Bill or government money market fund can deliver a higher after-tax yield than a fully taxable savings account at a similar headline rate. The short-term savings calculator computes the breakeven for your exact tax situation.

Your personal Bank Gap

See exactly what the gap is costing you.

Enter your balance and current rate. The Rate Gap Calculator shows the gap per year and over five years.

Calculate my Bank Gap

The Bank Gap (national) Bank Gap in Alabama Bank Gap in Arkansas Bank Gap in Delaware Bank Gap in Florida Browse all 50 states Methodology

Educational information, not tax or financial advice. State tax rules are summarized at a high level and depend on your full situation. Rates are illustrative of current market conditions and should be confirmed with the provider. Confirm tax treatment with a qualified professional.