Taxes and Credits | Why Southeast Mississippi | Mississippi Power | Economic Development

Taxes and Credits

Taxes and Credits

In order to attract and keep industry in Mississippi, the state offers a variety of incentives. The following information is provided as a broad guideline to identify existing tax levies along with possible incentives available to reduce tax liabilities.

Highlighted in this section are the more commonly used tax incentives that are currently available to manufacturers in the state. Mississippi businesses are subject to four basic taxes. Other incentives may be available to businesses that meet eligibility requirements.

Click on one of the links below to learn more or contact us for more information.

Corporate Income 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.

Mississippi Income Tax Rates:

First $5,000 of taxable income3%
Next $5,000 of taxable income4%
Remaining taxable income5%

Credits To Mississippi Income Tax

For additional credits, visit Mississippi Development Authority's website.

Corporate Franchise Tax

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
  • Aid-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 based on the following formula:

Book value of MS real and tangible personal property + MS Gross Receipts


Book value of total real and tangible personal property + total Gross Receipts

For additional credits, visit Mississippi Development Authority's website.

This ratio is then 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. This franchise tax rate is $2.50 per $1,000 of Mississippi capital.

Sales and Use Tax

The sales and use tax exemption for construction and expansion is allowed on eligible machinery and equipment purchases related to a new or expanded facility. These purchases are subject to a one-half or full exemption, depending upon construction location. This exemption is available from the beginning of construction or expansion up until three months after initial start-up. The exemption amount allowed is listed below:

County ClassificationExemption Amount
Tier III (less developed)100%
Tier II (moderately developed)50%
Tier I (more developed)50%

Contractor's tax – a one-half or full exemption of sales and use tax is available on component building materials used in construction, provided that the materials are sold to, billed to, and paid for by the eligible company. The labor portion of the contract cannot be exempted and is subject to the 3.5% contractor's tax. This exemption applies to retail rate taxes, but does not cover tagged vehicles, ongoing expenses, or supply items.

Actual state tax requirements vary widely depending upon corporate structure and activities.

Sales and Use Tax Exemption for Industrial Revenue Bond Financing

For additional credits, visit Mississippi Development Authority's website.

Property 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.

Property Tax Exemptions

Other Incentives and Taxes

Advantage Jobs Incentive Program

The Advantage Jobs Incentive Program provides for a rebate of a percentage of Mississippi payroll to qualified employers for a period of up to 10 years. This incentive is available to businesses that promise significant expansion of the economy through the creation of jobs. The average of all jobs included in the program must meet the minimum average wage requirements. Minimum job creation requirements are based on the level of development of the county.

The following businesses may qualify for this tax rebate:

  • Data or information processing enterprises that provide an average annual wage of 100% of the lesser of the average county or state wage in and creates 200 new jobs.
  • Any business except retailers, certain services, and gaming establishments that provide an average annual wage of 110% of the lesser of the average county or state wage in and creates 25 new jobs.
  • In addition to meeting the above requirements, eligible businesses must also:
    • Provide a basic health benefits plan.
    • Execute a performance agreement with MDA specifying the manner in which the enterprise will utilize the rebate.
  • The amount available for rebate is the lesser of:
    • The qualified Mississippi personal income tax withheld;
    • A legal maximum of 4% of applicable wages

Once the amount available is determined, the eligible company will receive 90% if the annual average wage is at least 110% of the lesser of the average county or state wage.

Industrial Development Revenue Bond Program

The Industrial Development Revenue Bond Program administered by the Mississippi Business Finance Corporation (MBFC) reduces the interest costs of financing projects for companies, the issuance of both taxable and tax-exempt bonds. Certain tax incentives, such as those provided by the Mississippi Rural Economic Development Assistance Program (RED), are designed to enhance projects which are financed through MBFC issued Industrial Development Revenue Bonds. Companies that meet eligibility requirements may receive Mississippi corporate income tax credits. Credit amounts available to an eligible company are a function of the company project related debt service. Other tax incentives such as sales tax exemptions on bond financed assets are also available. Ad valorem exemptions maybe granted if approved by the appropriate city and county.

For more information visit http://www.msbusinessfinance.com/programs/industrial-development-revenue-bond-program/

State Unemployment Compensation Tax

Mississippi levies an unemployment compensation tax on the first $7,000 of an employee's annual wages, as provided for in Section 71-5-1 of the Mississippi Code. The maximum contribution rate for employers is 5.4%, with the minimum rate equaling 0.9%. Both the state minimum rate and the business's rate vary from year to year. New employers in the state are assigned an initial rate of 2.7% of wages until the Mississippi Department of Employment Security can compute an actual experience rate for the employer. Rates are recalculated each October and apply to the following year's wages. Rates are adjusted after two to three years of Mississippi filings, depending upon what time of year the employer begins reporting.

For additional credits, visit Mississippi Development Authority's website.