Income tax; provide a credit for taxpayers who claim a federal earned income tax credit.

HB 721 creates a refundable state income tax credit equal to 5% of the federal Earned Income Tax Credit (EITC) claimed by Mississippi taxpayers. It directly affects low-to-moderate income Mississippi residents who qualify for and claim the federal EITC on their federal tax returns. The bill allows these taxpayers to receive a state credit that reduces their state tax liability, and if the credit exceeds their state tax bill, they get a refund for the difference. To claim the credit, taxpayers must first claim the federal EITC and provide their federal return to the state tax department. The credit applies to tax years beginning January 1, 2025, and is codified in Mississippi tax law.