Taxes in Mississippi: Features and Advantages

Main Taxes in the State of Mississippi

Income Tax:

Mississippi is gradually reducing its state income tax. As of 2025, a flat rate of 4.4% applies to income over $10,000. Previously, the state used a progressive scale, but reforms eliminated lower brackets, and by 2026 the rate is planned to drop further to 4%. This makes Mississippi relatively attractive for residents with above-average income and small business owners using pass-through structures (S corps, LLCs). Standard deductions and personal exemptions help reduce taxable income.

Sales Tax:

The base sales tax rate in Mississippi is 7%, one of the highest base rates in the U.S. Counties and cities may levy additional local surtaxes, especially in tourist and commercial areas. Sales tax applies to most goods and services, including restaurant, hotel, and entertainment services.

Determining the taxable base and applicable rate can be complex and requires professional expertise and knowledge of state law. Our company provides services for obtaining a Sales Tax Certificate, as well as preparing and filing Sales and Use Tax Returns. We advise business owners on registration, calculation, and reporting.

Property Tax:

Property tax in Mississippi is set at the county and school district levels. The average effective rate is about 0.81% of assessed value, making the burden moderate compared to other states. Primary residences may qualify for relief under the Homestead Exemption. Commercial and rental properties are fully taxed and subject to annual reassessment.

Business Taxes:

Mississippi levies corporate income tax with a progressive structure:

• 0% on the first $5,000 of taxable income
• 4% on income from $5,001 to $10,000
• 5% on income over $10,000

In addition, companies pay a Franchise Tax of $2.50 per $1,000 of capital used in the state, with a minimum of $25. Although this tax has been gradually reduced, it still applies to many business structures. S corporations and LLCs are generally exempt from corporate tax if profits are passed through to owners, but they must still file reports.

All companies operating in Mississippi must file an Annual Report by April 15 each year.

If you encounter difficulties filing the Annual Report, our company provides preparation and filing services.

Excise Taxes:

Mississippi levies excise taxes on gasoline, alcohol, tobacco, car rentals, and gambling activities (including casinos). Alcohol sales are regulated by the Alcoholic Beverage Control Division and require licensing and compliance reporting.

Favorable Tax Conditions in Mississippi

Mississippi is taking significant steps to reduce tax burdens, with plans to lower the income tax rate from 4.4% to 3.0% by 2030, with eventual elimination contingent on economic performance.

Since 2023, the state allows full expensing of equipment and machinery purchases in the year incurred, encouraging capital investment.

For homeowners and small property owners, the tax burden remains below the U.S. average, with the Homestead Exemption reducing payments on primary residences.

Taxes in Mississippi Compared to Other States

Compared to neighboring states such as Louisiana, Alabama, and Tennessee, Mississippi offers a simple and clear tax structure. Unlike Tennessee, which has no income tax, Mississippi applies a moderate flat rate but provides broader state-level relief. Corporate tax is lower than in New Jersey, New York, and California, and comparable to North Carolina.

Mississippi taxes the rental of commercial property, unlike most states where such transactions are exempt. This is important to consider when leasing office, warehouse, or manufacturing space.

Mississippi also levies a business tangible personal property tax — organizations must file reports on assets including furniture, equipment, machinery, and more. In some counties, exemptions apply for property below certain thresholds, but most businesses must account for such assets in their taxable base.