Taxes & Incentives
All businesses in Mississippi are subject to state taxes. Actual state tax requirements vary widely depending upon corporate structure and activities. These taxes fall into four basic tax types:
- Corporate Income Tax
- Corporate Franchise Tax
- Sales & Use Tax
- Property Tax
In Mississippi, corporate income is subject to a state income tax. This tax is levied in Section 27-7-5 of the Mississippi Code. Unless a company is taxable in another state, this tax is based on the company’s net taxable income.
Income tax for multi-state corporations is calculated by determining a Mississippi to total company ratio that is applied to the net business income for the corporation. For retailers, wholesalers, service providers, and many other business operations, income is apportioned based on a ratio of sales in Mississippi versus sales for the total entity. For manufacturers, income tax is apportioned using a three factored approach that consists of property, payroll, and sales in Mississippi related to everywhere.
After the apportioned net taxable income is calculated, additional non-business income attributable to Mississippi is added to the calculated amount to arrive at the Mississippi net taxable income.
Most corporations engaged in business in Mississippi are subject to franchise tax, as levied in Sections 27-13-5 and 27-13-7 of the Mississippi Code. Franchise tax is a tax that is assessed on the company’s capital value. The capital value for the corporation is calculated based on:
Capital stock issued and outstanding; and Paid-in Capital, Surplus, and Retained Earnings, including deferred taxes, deferred gains, deferred income, contingent liabilities, and other true reserves. For multi-state corporations, capital is pro-rated and applied to the corporation’s total capital value to calculate the amount of capital to be apportioned to Mississippi. The apportioned capital is then multiplied by the franchise tax rate to determine the Mississippi franchise tax liability.
The franchise tax rate is $2.50 per $1,000 of Mississippi capital.
All tangible personal property sold within the state is considered taxable unless specifically exempted or assigned a reduced rate by state law, as defined in Section 27-65-17 of the Mississippi Code. Similarly, companies doing business in Mississippi that bring tangible personal property into Mississippi are required to pay use tax on that property, as levied in Section 27-67-5 of the Mississippi Code.
Some services are also subject to sales tax in Mississippi, as listed in Section 27-65-23 of the Mississippi Code. Examples of taxable services include software sales and service, repairs of tangible personal property, and renting or leasing tangible personal property
The regular retail sales and use tax rate on goods and services is 7%, but the law does allow for a reduced rate for manufacturing machinery, equipment, and industrial purposes of 1.5%. Sales tax on automobiles in Mississippi is 5%, with truck-tractors and semi-trailers taxed at 3%.
For commercial construction in Mississippi, there is a contractor’s tax assessed on the construction of commercial real property that is calculated as 3.5% of the contractor’s gross receipts from the construction. The contractor’s tax has no exemptions, and the contractor is allowed to purchase all component building materials exempt from sales tax.
Counties and municipalities levy a property tax on real and tangible personal property in Mississippi. Generally, property is assessed at 15% of true value. This assessed value is then multiplied by the millage rate to determine the annual tax liability. Each city and/or county sets its tax rate, or millage. Mississippi does not have a state property tax.
Madison County and Mississippi can provide your company with several outstanding incentive programs designed to help you succeed. Our partnership begins with the initial contact and never ends. Madison County Economic Development Authority is committed to attracting new business and industry to the region while continually assisting our existing industry on a daily basis.