The Bureau of Economic Analysis estimates that Mississippi's total state product in 2006 was $84 billion. Per capita personal income in 2006 was only $26,908, the lowest per capita personal income of any state, but the state also has the nation's lowest living costs. Although the state has one of the lowest per capita income rates in the United States, Mississippians consistently rank as one of the highest per capita in charitable contributions.

Before the Civil War, Mississippi was the fifth-wealthiest state in the nation. Slaves were then counted as property and the rise in the cotton markets since the 1840s had increased their value. A majority - 55 percent - of the population of Mississippi was enslaved in 1860.

Largely due to the domination of the plantation economy, focused on the production of one agricultural good, cotton, the state was slow to use its wealth to invest in infrastructure such as public schools, roads and railroads. Industrialization also did not spread from northern climates until the late 20th century. The planter aristocracy, the elite of antebellum Mississippi, kept the tax structure low for themselves and made private improvements. The most successful planters, such as Confederate President Jefferson Davis, owned riverside properties along the Mississippi River.

During the Civil War, 30,000 Mississippi men were killed, and many more were left crippled and wounded. Changes to the labor structure and an agricultural depression throughout the South caused severe losses in wealth. In 1860 assessed valuation of property in Mississippi had been more than $500 million of which $218 million (43 percent) was estimated as the value of slaves. By 1870, total assets had decreased in value to roughly $177 million.

Poor whites and landless freed blacks suffered the most from the depression that followed the Civil War. The constitutional convention of early 1868 appointed a committee to recommend what was needed for relief of the state and its citizens. The committee found severe destitution among the laboring classes. It took years for the state to rebuild levees damaged in battles. The upset of the commodity system impoverished the state after the war. By 1868 an increased cotton crop began to show possibilities for free labor in the state, but the crop of 565,000 bales produced in 1870 was still less than half of prewar figures. By 1900, two-thirds of farm owners in Mississippi were blacks, but two decades later the majority of African Americans were sharecroppers. The low prices of cotton into the 1890s meant that more than a generation of African Americans lost the result of their labor when they had to sell off their farms to pay off accumulated debts.

Mississippi's rank as one of the poorest states is related to its dependence on cotton agriculture before and after the Civil War, late development of its frontier bottomlands in the Mississippi Delta, repeated natural disasters of flooding in the late 19th and early 20th century requiring massive capital investment in levees, heavy capital investment to ditch and drain the bottomlands, and slow development of railroads to link bottomland towns and river cities. The 1890 constitution discouraged industry, a legacy that would slow the state's progress for years. From Democratic militias and groups such as the White Camellia terrorizing African American Republicans to take political control in the 1870s, to the legislature passing segregation and disfranchisement legislation, the state refused for years to build human capital by fully educating all its citizens. In addition, the reliance on agriculture grew increasingly costly as the state suffered loss of crops due to the devastation of the boll weevil in the early 20th century, devastating floods in 1912-1913 and 1927, collapse of cotton prices after 1920, and drought in 1930.

It was not until 1884, after the flood of 1882, that the state created the Mississippi-Yazoo Delta District Levee Board and started successfully achieving longer term plans for levees in the upper Delta.

Despite the state's building and reinforcing levees for years, the Great Mississippi Flood of 1927 broke through and caused massive flooding of 27,000 square miles (70,000 km�) throughout the Delta and millions of dollars in property damages. With the Depression coming so soon after the flood, the state suffered badly during those years. Tens of thousands of people migrated north for jobs and chances to live as full citizens.

The legislature's 1990 decision to legalize casino gambling along the Mississippi River and the Gulf Coast has led to economic gains for the state. An estimated $500,000 per day in tax revenue was lost following Hurricane Katrina's severe damage to several coastal casinos in August 2005. Gambling towns in Mississippi include the Gulf Coast towns of Bay St. Louis, Gulfport and Biloxi, and the Mississippi River towns of Tunica (the third largest gaming area in the United States), Greenville, Vicksburg and Natchez. Before Hurricane Katrina struck the Gulf Coast, Mississippi was the second largest gambling state in the Union, after Nevada and ahead of New Jersey.

On October 17, 2005, Governor Haley Barbour signed a bill into law that now allows casinos in Hancock and Harrison counties to rebuild on land (but within 800 feet (240 m) of the water). The only exception is in Harrison County, where the new law states that casinos can be built to the southern boundary of U.S. Route 90.

Mississippi collects personal income tax in three tax brackets, ranging from 3% to 5%. The retail sales tax rate in Mississippi is 7%. Additional local sales taxes also are collected. For purposes of assessment for ad valorem taxes, taxable property is divided into five classes.

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