WORKFORCE TRAINING

GENERAL TAX STRUCTURE

Mississippi businesses are subject to three basic state taxes: corporate income tax, franchise tax, and sales and use tax. In addition, business property is taxed by both the city and the county. Click the links at right to find a summary describing these and other applicable tax structures.

CORPORATE INCOME TAX

CORPORATE FRANCHISE TAX

SALES AND USE TAX

PROPERTY TAX

STATE UNEMPLOYMENT TAX

WORKER'S COMPENSATION

PERSONAL INCOME TAX

CORPORATE INCOME TAX
All corporations carrying on business activities in Mississippi are taxed on the net-taxable income derived from those activities as follows:

First $5,000 3%
Next $5,000 4%
Over $10,000 5%

In the case of multi-state manufacturing corporations, net business income from manufacturing operations which cannot be directly assigned to the Mississippi operation are apportioned to the State on the basis of a three-factor formula:

1. Ratio of property (book value) in Mississippi versus total property;
2. Ratio of payroll in Mississippi compared to total payroll, and
3. Ratio of sales attributable to Mississippi compared to total sales.

Additional non-business income is added to the apportioned income.

Mississippi allows a net operating loss to be carried over for the five years following the taxable year of such loss.  The State, however, does not allow deductions of federal income taxes.  There is no county or municipal income tax in Mississippi.



CORPORATE FRANCHISE TAX
Mississippi's franchise tax applies to most corporations doing business in the State. The rate is $2.50 per $1,000 of the value of capital used, invested, or employed in the State. The tax base consists of capital stock issued and outstanding, surplus and undivided profits, and true reserves; however, the tax base cannot be less than the corporation's assessed value of real and intangible personal property in Mississippi.

For multi-state corporations, capital is apportioned to Mississippi on a formula/ratio basis. The ratio is calculated by dividing (a) the sum of the book value of real and tangible personal property owned in the State, plus the gross receipts received from business activity in the State; by (b) the sum of the book value of real and tangible total corporate personal property plus total corporate gross receipts received. The ratio is then applied to the total capital stock, surplus and undivided profits, and true reserves to calculate the amount of capital apportioned to Mississippi. This amount is then multiplied by the franchise tax to obtain the amount of franchise tax owed.



SALES & USE TAX
Sales and use taxes are applied to all businesses enjoying legal existence within the State. The general retail sales tax rate is 7%; other sales tax rates vary based upon the types of transactions. The following list details some of the more specific sales taxes relative to manufacturers.

Sales to a Manufacturer:

1. Raw materials (except sand and gravel, 5 cents per ton). RATE - 0%
2. Catalysts, chemicals, or gases used directly in processing (except natural gas, 1.5%). RATE - 0% 3. Packing and containers for sale with finished goods. RATE - 0%
4. Machinery and parts used directly in manufacturing and port operations (purchase or rental). RATE - 1.5%
5. Industrial electricity, natural gas, and fuels. RATE - 1.5%
6. Industrial water. RATE - 7%
7. Telephone and telegraph. RATE - 7%
8. All other equipment, furniture, fixtures, materials, supplies, and rentals not used directly in manufacturing. RATE - 7%
9. Contract construction for projects over $10,000 (except residential). RATE - 3.5%
10. Construction materials and new machinery or equipment not used directly in the manufacturing process. RATE - 3%
11. Purchase of machinery and equipment that is used directly in the manufacturing process, provided that the purchases are made directly from a supplier and not through a contractor. RATE - 0.75%

Sales by a Manufacturer:

1. To final consumer or user. RATE - 7%
2. To another manufacturer for use as manufacturing machinery. RATE - 1.5%
3. To another manufacturer as a raw material for further processing. RATE - 0%
4. To a wholesaler or retailer for resale. RATE - 0%
5. To exempt customers (e.g., government agencies, educational institutions, etc.). RATE - 0%

A use tax applies to personal property purchased in another state but utilized in Mississippi. The use tax is computed by applying the state sales tax rate applicable to that type of property less credit allowed for sales or use taxes paid in the state of purchase. Used property is generally taxed on the basis of its book value figured on straight line depreciation.



PROPERTY TAX
Counties and municipalities levy a property tax on real and tangible personal property. Most property is assessed at 15% of true value. Motor vehicles and utilities (excluding railroads) are assessed at 30% and owner-occupied residential properties at 10% of true value. Property is appraised and assessed by local assessors. Depreciation is allowed in determining true value. Tax rates are set by the political subdivision based on local budget requirements.

Mississippi does not have a state property tax.

Oktibbeha County Property Taxes

Appraisals are based on current market value and are done by the county tax assessor's office at the county and the city. Assessments are calculated as follows:

Mileage rates are subject to change each year.

2002 mileage rates (including school tax):
City: 83.81
County: 44.93



STATE UNEMPLOYMENT TAX
Mississippi levies an unemployment compensation tax on the first $7,000 of an employee's annual wages. The maximum rate is 5.4%. The minimum varies from year to year depending upon the general experience rate of the State. The minimum tax rate is 0.1%. New employers in the State are assigned a tax rate of 2.7% until such time as they establish an individual experience rate.



WORKER'S COMPENSATION
Employers in Mississippi having five or more employees must purchase Workers' Compensation coverage through insurance carriers, or qualify with the Mississippi Workers' Compensation Commission as a self-insurer. Compensation is two-thirds of the claimant's wages with a minimum of $25 and maximum of $235.84 per week for up to 450 weeks, but not to exceed $106,128, excluding medical payments. The amounts are indexed on an annual basis.



PERSONAL INCOME TAX
Individual income is taxed at the same rate as corporate income: 3% of the first $5,000 of taxable income, 4% of the next $5,000, and 5% of the balance. Individuals are allowed personal exemptions.



CORPORATE INCOME TAX

CORPORATE FRANCHISE TAX

SALES AND USE TAX

PROPERTY TAX

STATE UNEMPLOYMENT TAX

WORKER'S COMPENSATION

PERSONAL INCOME TAX