Mississippi Tax Rates

This post provides an overview of the primary taxes levied at the state level in Mississippi. The information contained here is intended for general reference. For individuals or businesses seeking comprehensive support with tax filings, compliance, or strategic planning, indinero offers expert services. We encourage all who utilize this summary to explore the tailored tax support available through indinero.

Individual Income Tax

Mississippi has transitioned to a flat rate individual income tax system, which is part of a phased-in plan to reduce the overall tax burden.

  • Tax Rate: The state income tax rate is a flat 4.40% of Mississippi taxable net income (for the 2025 tax year, reduced from 4.7%).
  • Initial Exemption: The first $10,000 of taxable income is taxed at 0% for all filers. The rate only applies to taxable income over this threshold.
  • Retirement Income: A significant benefit for seniors is that all retirement income is exempt from state income taxes. This includes income from pensions, 401(k) plans, IRAs, and Social Security benefits.
  • Local Income Tax: Mississippi does not impose a local or county income tax.

Sales and Use Tax

Sales tax is the primary source of state revenue, and Mississippi has one of the highest state sales tax rates in the U.S.

  • State Rate: The general state sales tax rate is a uniform 7.00% on the retail sale of tangible personal property and certain services.
  • Tax on Groceries: Mississippi is one of only a few states that taxes groceries (unprepared food for home consumption) at the full 7.00% sales tax rate.
  • Local Taxes: There is generally no county-level sales tax, and the average local sales tax is very low, keeping the combined state and local rate around 7.06% statewide. However, a few cities, like Jackson (1%) and Tupelo (0.25%), impose small, additional local sales taxes for specific purposes.
  • Exemptions: Prescription drugs are exempt from the state sales tax.
  • Use Tax: A state use tax of 7.00% applies to taxable items purchased outside of Mississippi but used, stored, or consumed in the state if state sales tax was not collected.

Property Tax (Ad Valorem Tax)

Property taxes in Mississippi are collected exclusively at the local level by counties, municipalities, and school districts, and they are among the lowest in the nation.

  • Assessment Ratios: Property is assessed at a low percentage of its market value, which is a major factor in the low tax bills. The ratios are set by state law:
    • Residential Property (Owner-Occupied): 10% of market value.
    • Commercial/Other Real Property: 15% of market value.
    • Motor Vehicles: 30% of market value.
  • Homestead Exemption: The state provides a Homestead Exemption on the assessed value of an owner-occupied primary residence, further lowering the taxable value.
  • Tax Calculation: The tax owed is calculated by applying the local millage rate (set by local budgets) to the low assessed value.

Corporate Income Tax and Franchise Tax

Mississippi imposes a tax on corporate net income using a graduated rate structure, and it also imposes a franchise tax.

  • Corporate Income Tax Rates: The tax is imposed on corporate net income derived from Mississippi business activities:
    • First $5,000: 3.0%
    • Next $5,000: 4.0%
    • Over $10,000: 5.0%
  • Corporate Franchise Tax: This tax is levied on corporations for the privilege of doing business in the state. It is calculated at a rate of $2.50 for each $1,000 of the capital employed in Mississippi (including stock, paid-in capital, and retained earnings), with a minimum fee of $25.
  • Apportionment: For multi-state manufacturing corporations, income is apportioned using a three-factor formula (property, payroll, and sales) to determine the portion of income taxable in Mississippi.

Unique and Excise Taxes

  • Motor Fuel Tax: Mississippi has one of the lowest gas tax rates in the country, set at 18.4 cents per gallon for gasoline.
  • No Estate or Inheritance Tax: Mississippi does not impose a state-level estate tax or inheritance tax.

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.