Mississippi is a state located in the southern part of the United States, famous for its cotton fields, blues music, and southern hospitality. Mississippi has a population of approximately 3 million people and a total area of 48,432 square miles, making it the 32nd largest state in the U.S. Mississippi State has its own tax system, which is different from the federal tax system. In this article, we are going to take a deep dive into the Mississippi State Tax System.
Overview of the Mississippi State Tax System
The Mississippi State Tax System is made up of several types of taxes, including personal income tax, sales tax, use tax, property tax, and corporate income tax. The state’s revenue system is designed to produce sufficient funds to support the state’s government, including funding for the provision of basic services like education, healthcare, infrastructure, and public safety.
Mississippi State Personal Income Tax
Mississippi is one of the few states in the United States that still collects personal income taxes. The state’s personal income tax rate ranges from 3% to 5%. The tax applies to all residents of Mississippi who earn a minimum of $10,000 per year or more. The tax rates charged are as follows:
– 3% on the first $5,000 of taxable income.
– 4% on taxable income between $5,001 and $10,000.
– 5% on taxable income above $10,001.
Mississippi State Sales Tax
The Mississippi State Sales Tax is a tax levied on the retail price of most goods and services sold in the state. The sales tax is set at a rate of 7%, and this rate applies to the entire state of Mississippi. However, there are exemptions and exclusions in place for some goods and services, including sales of prescription drugs, medical equipment, and certain groceries.
In addition to the State Sales Tax, there is also a local sales tax. This is a tax levied by cities, counties, and municipalities on sales made within their borders. The local sales tax is generally set at a rate of 1% to 2%, depending on the municipality. The total sales tax rate in Mississippi, including both the state and local sales tax, can range from 0% to 9%.
Mississippi State Use Tax
The Mississippi State Use Tax is a tax levied on the use and/or possession of tangible personal property in the state of Mississippi, where the property has not been subject to sales tax or has been subject to a lower rate of sales tax. The Use Tax applies to purchases made from out-of-state retailers, such as online purchases.
The Use Tax rate is equivalent to the Sales Tax rate in Mississippi, which is currently set at 7%. The Use Tax is self-assessed, which means that taxpayers are required to calculate and report the Use Tax on their state income tax returns.
Mississippi State Property Tax
The Mississippi State Property Tax is a tax levied on real and personal property located within the state of Mississippi. Real property includes homes, buildings, and land, while personal property includes things like vehicles, boats, and aircraft. The State Property Tax is assessed by local governments, such as cities, counties, and municipalities.
In Mississippi, the property tax is calculated based on the assessed value of the property. The assessed value is determined by the local government, which takes into account factors such as the age, condition, and location of the property. The property tax rate in Mississippi varies from one locality to another, but the average effective property tax rate is around 0.80%.
Mississippi State Corporate Income Tax
The Mississippi State Corporate Income Tax is a tax levied on the net income of corporations doing business in Mississippi. All corporations, including S corporations, limited liability companies (LLCs), and partnerships, are subject to the corporate income tax. The Corporate Income Tax rate is 5%, which is applicable on the net taxable income of the business.
However, there are exceptions in place for certain types of corporations. For example, corporations that derive more than 80% of their income from Mississippi sources are eligible for a tax rate reduction to 3%. There are also exemptions and deductions available to Mississippi corporations, including a deduction for specific expenses incurred in carrying out business.
Mississippi State Estate Tax
Mississippi does not impose an estate tax on the value of the estate transferred upon death of its residents.
Federal Income Tax Deduction for Mississippi Taxes
Mississippi residents who pay state income tax can deduct that tax from their federal income tax returns. This deduction is known as the State and Local Tax Deduction (SALT). In 2017, the federal government imposed a cap on the SALT deduction, allowing taxpayers to deduct a maximum of $10,000 in state and local taxes from federal tax returns. This limit primarily affects high-income individuals and taxpayers who reside in states with higher tax rates.
Conclusion
The Mississippi State Tax System is designed to generate revenue to fund the activities of the state government, including education, infrastructure, and public safety. The state has several types of taxes, including personal income tax, sales tax, use tax, property tax, and corporate income tax. It is essential that residents of Mississippi have a basic understanding of the State’s taxation policies to ensure they comply with all requirements and take full advantage of any tax credits and deductions available to them.
Income taxes in Mississippi are combined between state and local taxation so personal income tax rate can be as high as 10% Â Like other states, there are excise taxes of liquor, beer and cigarettes, as well as vehicle taxes. Â There are also property taxes that must be given consideration. Â Tax returns are due on April 15.
Mississippi state sales tax – 7%, (health, residential utilities, motor fuel, newspapers, Medicare/Medicaid payments and prescription drugs exempt).  This is in addition to local sales taxes that can be tacked on, up to 3%.  Use taxes may be applicable for purchases made out of state for use in Mississippi.  Sales tax burden higher than national average.
Mississippi personal income tax
There are three tax brackets:
– 3 percent on the first $5,000 of taxable income.
– 4 percent on taxable income between $5,001 and $10,000.
– 5 percent on taxable income of $10,001 and above.
A great number of Mississippi residents will pay in the top tax bracket.
This is a lower tax burden than the national average. Â Casino winnings that are reported to the IRS are subject to a 3% tax.
Mississippi excise taxes
Taxes assessed on vehicles, alcohol, tobacco, gasoline and are in addition to federal excise taxes.
– $.68 per package of 20 cigarettes
– $6.75/gallon on spirits
– $.427 per gallon of beer or table wine
– $.18/gallon on gasoline
Mississippi inheritance tax
There are no longer taxes on inheritance and estates in Mississippi. Â Only federal laws are in effect.
Mississippi payroll taxes
State Disability Insurance – none
State Unemployment Insurance – .85% to 5.40%, wage base is $14,000.  New employer contribution is 1.15%.
Workforce training enhancement tax rate is .3%.
State minimum wage follows federal law.
Mississippi state property tax
Property tax is broken up into five categories that encompass both real estate and other property.
– Class I — Single-family owner-occupied, residential real property: 10 percent.
– Class II — All other real property: 15 percent.
– Class III — Personal property: 15 percent.
– Class IV — Public service property assessed by the state or county: 30 percent.
– Class V — Motor vehicles: 30 percent.
The homestead exemption is $300 for all homeowners.
Mississippi state corporate tax
The top tax rate for corporations in Mississippi is 5% for corporations grossing $10,000 or more. Â This comparatively lower than other states.
Exemptions
There are personal exemptions from taxation that total $6,000 for individuals and $12,300 for couples.  Dependents are subject to a $1,500 exemption.  Those 65 and older receive a $1,500 exemption.
Most pensions and retirement is exempt from state taxes. Â Social security income is also not taxed.
There are two property tax refund programs for homeowners, each depending on income and property tax assessed.
Military retirement pay is not taxed.  This includes benefits passed to the surviving spouse.  Military disability and veteran’s pensions are almost always exempt from federal and Mississippi state taxation.
