Mississippi
Taxes and business formation • USA 2025–2026
Corporation in Mississippi
Tax system of Mississippi
Income Tax
Mississippi is gradually reducing its state personal income tax. Starting in 2025, a flat rate of 4.4% applies to income above $10,000. Previously the state had a progressive scale, but tax reform eliminated the lower brackets, with a further reduction to 4% planned by 2026. This makes Mississippi relatively attractive to residents with above-average incomes, as well as to small business owners using pass-through structures (S-corporations, LLCs). The state offers a standard deduction and personal exemptions that help reduce the taxable base.
Sales Tax
Mississippi's base sales tax rate is 7%, one of the highest base rates in the U.S. Individual counties and cities can levy an additional local surtax, especially in tourist and commercially active areas. Sales tax applies to most goods and a number of services, including restaurant, hotel, and entertainment services. Determining the taxable base and the correct sales tax rate can be quite complex and requires a professional approach and knowledge of state law. Our firm provides services for obtaining a Sales Tax Certificate and for preparing and filing the Sales and Use Tax Return. We advise business owners on all matters related to this tax, including registration, calculation, and reporting.
Property Tax
Property tax in Mississippi is set at the county and school district level. On average, the effective rate is about 0.81% of assessed value, which makes the tax burden moderate compared with other states. A primary residence can be exempt from part of the tax through the Homestead Exemption program. Commercial real estate and rental properties are taxed at the full rate and are subject to annual reassessment.
Business Taxes
Mississippi imposes a 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, and 5% on income above $10,000. In addition, companies pay a Franchise Tax of $2.50 per $1,000 of capital used in the state, with a minimum tax of $25. Although this tax has been gradually reduced, it still applies to many types of business structures. S-corporations and LLCs are generally exempt from the corporate tax if profits are distributed to members, but they are still required to file returns. All companies doing business in Mississippi are required to file an Annual Report each year. The filing deadline is April 15 each year. If you have difficulty filing the Annual Report, our firm provides services for preparing and filing this report.
Excise Taxes
Mississippi levies excise taxes on gasoline, alcohol, tobacco, car rentals, and on activities related to gambling (including casinos). Alcohol sales are regulated by the state through the Alcoholic Beverage Control Division and require the appropriate licenses and compliance with reporting requirements.
Favorable Tax Conditions
Mississippi is taking significant steps to reduce its tax burden: by 2030, the personal income tax rate is scheduled to drop from 4.4% to 3.0%, with further reductions aimed at eventually eliminating the tax altogether, provided certain economic benchmarks are met. Since 2023, the state has allowed full expensing of equipment and machinery costs in the year of purchase for companies, which encourages capital investment. For homeowners and owners of small real estate holdings, the tax burden remains below the U.S. average, and the Homestead Exemption reduces the amount owed on a primary residence.
Compared to Other States
Compared with neighboring states such as Louisiana, Alabama, and Tennessee, Mississippi stands out for its simple and clear tax structure. Unlike Tennessee, which has no personal income tax at all, Mississippi applies a moderate flat rate but offers broader benefits at the state level. Its corporate tax is lower than in New Jersey, New York, and California, and comparable to North Carolina. Mississippi imposes sales tax on commercial real estate rentals, which sets it apart from most states, where such transactions are not taxable. This is important to consider when entering into lease agreements for office, warehouse, or production space. Mississippi also imposes a tangible personal property tax on businesses — organizations must file asset reports covering furniture, equipment, manufacturing machinery, and so on. In a number of counties, property valued below a certain threshold is exempt, but most businesses must include such assets in their overall tax base.
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