Mississippi Business Taxes at a Glance
Mississippi is in the middle of a long phase-down of its individual income tax. Under legislation passed in 2025, the rate on income above $10,000 falls each year through 2030, with further reductions possible until the tax reaches zero. The corporate franchise tax is also being phased out, and the sales tax on groceries was cut in 2025. BOMCAS helps Mississippi individuals and businesses plan for these changes.
Individual Income Tax: A Scheduled Phase-Down
Mississippi does not tax the first $10,000 of taxable income. Income above that amount is taxed at a single rate, which House Bill 1, the Build Up Mississippi Act, reduces each year: to 4% for 2026, then down in steps to 3% for 2030. Starting in 2031, further cuts can occur each year, but only if the state's reserve fund is full and revenue exceeds set targets. The law is designed to eventually eliminate the tax.
Because the rate is falling each year, timing matters. Deferring income to a later year or accelerating deductions into an earlier one can reduce Mississippi tax, as long as it makes sense for federal purposes too. We prepare Mississippi returns and include state rate changes in planning.
Mississippi does not tax Social Security or qualified retirement income, which matters to retirees moving to the state.
Corporate Income and Franchise Tax
Corporations active in Mississippi owe corporate income tax on the portion of income apportioned to the state. They also pay a franchise tax based on capital employed in Mississippi, but the franchise tax is being phased down year by year under earlier legislation, and the phase-down continued in 2026. S corporations are not subject to the income tax at the entity level but may still owe franchise tax during the phase-down.
We prepare corporate and S corporation returns, compute the franchise tax under the current rate, and track how the phase-down affects each client.
Sales and Use Tax
Mississippi's state sales tax rate is one of the higher ones, with limited local additions in certain cities and tourism areas. House Bill 1 reduced the rate on groceries from July 1, 2025. Certain items, such as some manufacturing machinery, are taxed at reduced rates. Contractors on large projects pay a contractor's tax and may need a material purchase certificate.
We register businesses, prepare returns, apply the right rate to each category, and review use tax on purchases.
Contractors and Large Projects
Mississippi imposes a contractor's tax on the gross receipts of prime contractors on construction contracts above a set amount, in place of sales tax on materials for those projects. Contractors register each qualifying job, and nonresident contractors face additional requirements before starting work, such as bonding or a deposit. Subcontractors and suppliers need the right documentation. We help contractors register projects, track receipts by job, and file returns.
Gaming and Gulf Coast Tourism
Casinos along the Gulf Coast and the Mississippi River pay gaming taxes overseen by the Mississippi Gaming Commission and the Department of Revenue. Gamblers' winnings are subject to withholding under Mississippi's specific rules, which differ from those in most states. Hotels, restaurants, and attractions in tourism areas may also owe local tourism taxes.
Our role with casino operators is limited to general accounting support. We help hospitality and tourism businesses with sales tax, local taxes, payroll for large staff, and tip reporting.
Agriculture
Agriculture remains a large part of Mississippi's economy, including poultry, catfish, cotton, soybeans, and timber. Farm and timber clients need:
- Livestock, crop, and timber inventory records
- Federal farm reporting, including income averaging and farm program payments
- Equipment depreciation schedules
- Records for agricultural sales tax exemptions
Manufacturing and Shipbuilding
Automotive plants, suppliers, and shipbuilding employ many Mississippians. These businesses need inventory and cost accounting, fixed asset records for property tax and incentives, and payroll for large workforces. We provide bookkeeping and tax support set up for manufacturing.
Homestead Exemption for New Homeowners
Mississippi homeowners can reduce property tax by filing for homestead exemption with the county tax assessor. The application is not automatic and is due early in the year after the purchase. New residents should file it with their first year's records.
Payroll and Annual Withholding Updates
Mississippi employers withhold state income tax and report unemployment insurance to the Mississippi Department of Employment Security. Because the income tax rate changes each year through 2030, withholding tables are updated annually. We run payroll, update withholding each year, and file quarterly reports.
Retiring in Mississippi
Mississippi does not tax Social Security or qualified retirement income, such as pensions and qualifying retirement plan distributions, and the rate on other income is falling each year. That combination draws retirees, including people returning to family in the state. In the year of the move, the part-year return covers income from the date residency begins. We help retirees identify which income is exempt and plan for any investment or business income that remains taxable.
Books for Grocery Rates, Franchise Tax, and Contracts
Mississippi bookkeeping should separate grocery and general sales for sales tax, track capital accounts for the franchise tax during its phase-down, and record contractor's tax on projects. We set up the chart of accounts and monthly close to provide each figure.
Working With BOMCAS in Mississippi
Individuals planning around the yearly rate reductions, corporations tracking the franchise tax phase-out, and contractors registering large projects can contact BOMCAS for a remote review. City-level pages for Mississippi, organized by service, will be published under this section. Return to the BOMCAS home page or our United States services for more. This page is general information and not advice for your situation.
Talk to BOMCAS About Your Mississippi Taxes
Have a question about your Mississippi filings, payroll or bookkeeping? Contact BOMCAS or use the contact form below, and we will get back to you as soon as possible. You can also browse all United States services.