Tax Overview

Corporate Income Tax

In Mississippi, corporate income is subject a state income tax. Mississippi income tax rates are:

  • 3% – on the first $5,000 of taxable income
  • 4% – on the next $5,000 of taxable income
  • 5% – on the remaining taxable income

Corporate Franchise Tax

Most corporations engaged in business in Mississippi are subject to a franchise tax of: $2.50 per $1,000 of capital invested in Mississippi.

Sales and Use Tax

The State of Mississippi has a sales tax rate of 7%. Manufacturing machinery and equipment is taxed at a lower rate of 1.5%.

Property Tax

Each jurisdiction within Greater Hattiesburg has a different millage rate. One mill is equal to $1 per $1,000 of assessed value. Commercial property is assessed at 15% of true value.

Inventory Tax

Inventory tax is a local property tax charge on finished goods inventory at the same millage rates as other local rates. Inventory includes raw materials, goods in progress, and the inventory of finished goods for sale. Inventory is considered Class 3 property.

Tax Incentives

Jobs Tax Credit

  • Companies receive a corporate income tax credit for creating jobs
  • Credits are equal to 2.5% — 10% of payroll, depending on county location for each newly created job
  • Credits are available for a five-year period and are taken in years’ two through six after jobs are created
  • Eligible businesses include: manufacturers, processors, wholesalers, distributors, warehouses, research and development facilities, data, information processing and telecommunications enterprises and technology intensive industries
  • Companies can also opt to have these credits converted into a training grant

Advantage Jobs Rebate

  • Businesses creating new high quality jobs in Mississippi are eligible to receive a rebate equal to 90% of income tax withholdings for employees with new direct jobs
  • Eligible businesses include: Data or information processing companies that pay an average annual wage of 100% of the average county or state wage (whichever is less) and create 200 full-time jobs;
  • Any business (except a retailer or gaming establishment) that pays an average annual wage of 110% of the average county or state wage (whichever is less) and create at least 25 new full-time jobs
  • Businesses must provide a basic health benefits plan

Rural Economic Development (RED) Tax Credits

  • Income tax credit used in conjunction with Mississippi Finance Corporation-issued industrial revenue bond
  • Based on amount of bond-related debt service
  • Credits can use used to offset up to 80% of a company’s state corporate income tax liability each year for the life of the bonds
  • Eligible businesses include: manufacturing, telecommunications, data processing, distribution or warehouse facilities

Sales and Use Tax Exemptions

  • Provides a 50% exemption to the 7% general sales tax on qualified project purchases
  • Provides a 50% exemption on the 1.5% sales tax on machinery and equipment purchases
  • Exemption is valid from project start through the 3rd month of operations

Real and Personal Property Tax

  • Exemption from property tax on land, building and equipment for up to 10 years
  • School taxes are not exempt
  • Eligible businesses include: manufacturers, processors, research and development facilities, refineries, warehouse and distribution facilities, data and information processing companies and telecommunications and technology-intensive industries

Fee-in-Lieu of Taxes

  • A company may be approved by local authorities to pay a fee in lieu of standard property taxes
  • Negotiated fee is valid for 10 years but cannot be less than 1/3 of the property tax levy
  • Considered when a company’s private investment in land, building(s) and equipment exceed $100M

Freeport Warehouse Exemption

  • An exemption from property taxes paid on finished good inventories leaving Mississippi
  • The exemption may be for all property taxes
  • Local authorities must approve the exemption

Research and Development Skills Tax Credit

  • Income tax credit of up to $1,000 per year for a five-year period for any full-time position requiring research and development skills
  • Any business with positions requiring research or development skills may apply

On-the-Job Training

  • Recruitment and Job Referral Assistance via the WIN Job Center
  • Applicant Assessment and Testing via Pearl River Community College
  • Customized Pre-Employment Training via Pearl River Community College
  • Dedicated Project Management support through recruiting, screening and on-boarding processes, provided by Pearl River Community College
  • On-the-Job Training (OJT) Program through the WIN Job Center
  • Wage criteria must be between $12-$30/hour
  • Program provides 50% reimbursement of hourly wages during the allowable training period
  • A WIN Job Center OJT Specialist determines the allowable training period depending on each

Existing Manufacturer Tax Credit

  • The only requirements for recipients of this tax credit are to have operated in the state for a minimum of two years and accrue a minimum project investment of $1M in buildings, equipment, or other assets.
  • The tax credit itself would reward a 5% credit of the total project investment to state income tax liability for the year the investment occurs; however, the rewarded tax credit cannot exceed $1M (in other words, maximum investment qualified is $20M).
  • Credits can be utilized to offset up to 50% of a company’s income tax liability after all other credits have been taken, and unused investment tax credits can be carried forward up to five years.
  • Awarded and administered through Mississippi Department of Revenue (DOR).

Sector Specific Incentives

MS Aerospace Initiative

  • Provides aerospace businesses with 10-year state income and franchise tax exemptions and a sales and use tax exemption for the start-up of a facility or completion of an expansion
  • Available to companies that manufacture or assemble components for the aerospace industry or provide research, development or training services for that sector
  • Must invest at least $30M and create at least 100 full-time jobs to qualify

Data Center Sales Tax Exemption

  • Receive a sales tax exemption for computing equipment and software, and for building materials used in construction, provided materials are purchased directly
  • Both new and replacement equipment qualify
  • Must invest $50M in the state and create at least 50 new jobs paying 150% of the average state wage
  • Must be certified as data centers by Mississippi Development Authority to qualify

Clean Energy Initiative

  • Provides companies that manufacture systems or components used to generate clean, renewable or alternative energy a 10-year state year state income and franchise tax exemption and a sales and use tax exemption for the startup of a facility or completion of expansion
  • Must invest at least $50M and create at least 250 full-time jobs to qualify

Healthcare Industry Zone Incentive

  • Qualifying healthcare-related businesses that locate in a Health Care Zone include business engaged in the following: medical supply, biologics, laboratory testing, medical product distribution, diagnostic imaging, biotechnology, pharmaceutical research and development, nursing homes/assisted living facilities, and medical equipment or medicine production and related manufacturing or processing.
  • Eligible companies receive an accelerated 10-year state income tax depreciation deduction and a sales tax exemption for equipment and materials purchased from the date of the project’s certification until three months after the facility is completed.
  • Fee-in-lieu of Taxes for any certificated project over $10,000,000 or a 10-year ad valorem tax exemption at the city of county’s discretion.

National and Regional Headquarters Tax Credit

  • Minimum of twenty (20) new headquarters jobs must be created within one (1) year.
  • $500 credit for each new full=time employee, $1,000 for reach new full-time employee whose salary is one hundred twenty-five percent (125%) of the average annual state wage, or $2,000 for reach new full-time employee whose salary is town hundred percent (200%) of the average annual state wage.
  • Available for a five (5) year period to any company that transfers or relocates national or regional headquarters to Mississippi in an amount equal to the actual relocation costs paid by the company.
  • Can be used in combination with all other tax credits.

Historic Tax Credits

Local Historic Tax Abatement

A 7 year tax exemption for residential or commercial contributing structures within a Local Historic District or Central Business District which have increased in Tax Assessed value by 20% for residential or 10% for commercial. The maximum tax exemption is not to exceed 50% of the value of the improvements.

Contact City of Hattiesburg – Kermas Eaton, City Clerk at 601-554-4502.

State Historic 25% Tax Credit

The Mississippi Department of Archives and History is responsible for the administration of the program, which provides for a state income tax credit equal to 25% of the qualified expenses of rehabilitating historic structures used for residential or business purposes.

  • To be eligible, the qualified rehabilitation expenditures must exceed:
    • $5,000 in the case of an owner-occupied dwelling, or
    • 50% of the total basis in the property in the case of all properties other than owner-occupied dwellings.
  • All work must meet the Secretary of the Interior’s Standards for Rehabilitation.
  • Only rehabilitation expenditures incurred after January 1, 2006, qualify.
  • Not-for-profit entities are ineligible to receive the credits.

Federal Historic 20% Tax Credit

To be eligible for the 20% rehabilitation tax credit, a project must also meet the following basic tax requirements of the Internal Revenue Code:

  • The building must be depreciable – commercial or rental.
  • The property must be placed in service (i.e., returned to use). Furthermore, the owner must hold the building for five full years after completing the rehabilitation, or pay back the credit.
  • The rehabilitation must be substantial, which means that during a 24-month period selected by the taxpayer, rehabilitation expenditures must exceed the greater of $5,000 or the adjusted basis of the building.
  • The building must be a certified historic structure when it is placed in service.

Federal Historic 10% Tax Credit

The 10% tax credit is available for the rehabilitation of non-historic buildings that were built before 1936 and that will be used for income-producing purposes other than residential.

  • The property must be depreciable – commercial.
  • Rehabilitation must be substantial, meaning that the cost of the rehabilitation must exceed the greater of either $5,000 or the adjusted basis of the property.
  • The 10% credit applies only to buildings rehabilitated for non-residential uses.