About 60% of plastic packaging in Sweden ends up in mixed municipal solid waste (MSW), which is incinerated with energy recovery. This status quo presents a missed opportunity to meet ambitious recycling targets. This study aims to provide a detailed characterization of plastic packaging in mixed MSW to assess its potential for recycling and its significance in improving the overall recycling rate. A case study involving a Swedish city was conducted wherein a sample of 5500 kg of mixed MSW from 920 households was characterized. From the 31% recycling rate, improvement of up to 59% can be achieved by diverting this misplaced plastic packaging into the existing recycling system. An additional 9% increase remains challenging to achieve due to the occurrence of non-recyclable attributes like black and multilayer packaging. The highlighted key enabler is the combination of correct household waste separation behavior and the establishment of mechanical sorting facilities to recover plastic waste from mixed MSW. These recycling potentials and associated challenges are discussed in the context of Sweden's ongoing efforts across the plastic packaging value chain. Furthermore, the importance of extended waste characterization is emphasized as a tool for identifying recycling potentials and monitoring the effectiveness of measures in enhancing circularity and resource-efficiency.