The Mississippi corporate tax rate is changing. Currently, the corporate income tax rates are 3 percent for the first $5,000, 4 percent for the next $5,000, and 5 percent on anything beyond $10,000.

In general, Mississippi businesses are subject to four state taxes:

  • Corporate income tax.
  • Franchise tax.
  • Sales and use tax.
  • Property tax.

Business Taxes

For businesses and corporations registered or doing business in Mississippi, the corporate income tax is levied on gross taxable income. Businesses include those with a sales tax nexus — that is, a presence in the state. The bracketed tax system is applied similarly to personal income tax, requiring the filing of an annual tax return. Deductions for businesses include wages, cost of goods sold, and additional allowable business expenses.

Generally, registered businesses such as sole proprietorships, partnerships, and S corporations are considered flow-through entities and are not subject to reporting income and paying both Mississippi and federal corporate income taxes on earnings.

C corporations are the most common business structures subject to corporate taxation. Because these types of organizations are taxed on revenue as well as through personal income tax paid by shareholders and company owners, C corporation profits are effectively taxed twice, known as double taxation.

Other State Taxes

A state unemployment compensation tax is levied on the first $7,000 of an employee's annual wages, with a maximum rate of 5.4 percent. Minimum rates vary while maintaining a 1.2 percent floor.

Personal income tax/individual income tax rates are the same as corporate income:

  • $0 - $5,000 at 3 percent.
  • $5,000 - $10,000 at 4 percent.
  • $10,000+ at 5 percent.

Sales Tax

Mississippi levies a single statewide sales tax of 7 percent on sales of tangible personal property. Taxable services include air conditioning installation/repair, car washing, etc.

Tangible personal property includes physical goods such as furniture, clothing, and electronics. The state taxes all food at the full sales tax rate. Prescription drugs are sales tax exempt.

The first of two sales tax holidays typically occurs over the last weekend in July, at which time clothing and footwear costing less than $100 can be purchased free of sales tax. The second holiday, called the “Mississippi Second Amendment Sales Tax Holiday,” happens the first weekend in September, with firearms, ammunition, and hunting supplies exempt.

Property Tax

The Magnolia State has the 15th-lowest property tax rate in the nation at 0.8 percent, with the sixth-lowest payment in the country at just $841 due to the relatively low home values.

Gas Tax

Regular gasoline in Mississippi is taxed at 18.79 cents/gallon, the fifth-lowest U.S. rate. Diesel fuel is taxed at 18.40 cents/gallon.

Cigarette and Alcohol Tax

Mississippi's cigarette tax is the 13th-lowest in the country at 68 cents/pack, while the state's alcoholic beverage taxes rank in the top 15 nationwide at $7.74/gallon.

The Largest Tax Cut in Mississippi History

Known as the “Taxpayer Pay Raise Act,” Mississippi Governor Phil Bryant signed into law the largest single tax cut in Mississippi history. After its scheduled 10-year rollout, three significant changes will occur:

  • Elimination of corporate franchise tax.
  • Elimination of 3-percent tax brackets for individual and corporate income.
  • Self-employed residents will be allowed to exempt a portion of federal self-employment tax.

Simply put, Mississippians will reduce state income taxes by $150/year on the first $5,000 of taxable income with the full implementation of the program by 2022, and self-employed residents can deduct half of their federal self-employment taxes by 2019.

What Is Sales Tax Nexus?

What is a sales tax nexus? Could it be just a fancy way of saying “significant presence” in the state? Yes. Mississippi considers a seller to have sales tax nexus if any of the following are true:

  • The seller owns an office or place of business in the state.
  • Employees or agents of the business serve customers in Mississippi or solicit or accept orders for merchandise.

What Is Economic Nexus

?Vendors making more than $250,000 in the preceding 12 months in Mississippi are considered to have economic nexus, and the state considers these vendors obligated to collect sales tax from buyers in the state.

Is What I Sell Taxable?

Services in Mississippi are generally not taxable. For example, photographer services need not charge sales tax.

Tangible products are taxable in Mississippi.

Registering For a Sales Tax Permit

If you have sales tax nexus in Mississippi and your products are taxable, you are required to register for a sales tax permit.

  • For in-state sales tax collection, simply collect at the rate charged where your business is located.
  • If your business is based outside of Mississippi, you are a considered a “remote seller” and must charge a “use tax” at the state rate of 7 percent.

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