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Incentives and Taxes

STATE INCENTIVES

The MDA Financial Resources Division offers a variety of incentive programs designed to assist businesses in obtaining loans for development and expansion and to position the state as an aggressive competitor in the global market. Explore our links to a broad range of grant and loan programs specifically designed for business customers, as well as tax incentives that can really make a difference in your future success.

 

LOCAL INCENTIVES

Tax Exemption:
The KADC has a number of financial incentives and tools readily available to qualifying companies. These include tax exemptions of the ad valorem taxes, excluding school taxes, for a period of up to seven or ten years depending on the type of business and the investment levels. All of these exemptions are subject to approval of the specific governing body which sets forth the procedural requirements for the granting of such tax exemptions. The KADC is available to assist any new or expanding business to determine the qualifications and the term of eligibility of the exemption.

Technical Resources and Training:
The KADC can put you in contact with a variety of resources for customized training, workforce and employment and business development, including: The continuing education division of Holmes Community College, offering classes and training suited to individual business needs, especially customized training seminars, continuing education and emergency or safety education. Mississippi State Entrepreneurial Center's education programs span the entire lifecycle of the entrepreneurial process from start up to growth and succession planning. The Jackson State Small Business Development Center at Jackson State University provides confidential counseling and training to business owners and people interested in starting a business.  The Mississippi Partnership Workforce Investment Board is a major resource for employment, training, job service and rehabilitation services.

Additional resources include Buildings and Sites:
A prime economic development incentive is the availability of existing commercial and industrial buildings and sites. Indeed, new businesses and developers find a variety of available land, buildings, and industrial sites.  In addition, these buildings and sites are generally available at competitive lease and purchase rates, especially when compared to nearby urban areas such as Jackson Mississippi and MemphisTennessee. Many of the existing buildings offer incentives including free start-up lease payments for the first month(s).  For detailed profiles of what's available, please see the Property section of this Web site.

The KADC's mission to  "... generate high quality jobs and tax base by promoting and facilitating the growth of existing business in key sectors and the development of business," requires that we are engaged in all aspects of the communities growth. Please allow the KADC to assist with your business location to Kosciusko-AttalaCounty.

 

TAXES AND CREDITS IN MISSISSIPPI

All businesses in Mississippi are subject to taxes within the state. These taxes fall into four basic tax types:

  • Corporate Income Tax
  • Corporate Franchis Tax
  • Sales and Use Tax
  • Local Property Tax


Actual state tax requirements vary widely depending upon corporate structure and activities, but the following information is provided as a broad guideline to identify existing tax levies along with possible incentives available to reduce tax liabilities. 


Corporate Income Tax

In Mississippi, corporate income is subject to a state income tax. This tax is levied in Section 27-7-5 of the Mississippi Code. Unless a company is taxable in another state, this tax is based on the company’s net taxable income. 

Income tax for multi-state corporations is calculated by determining a Mississippi to total company ratio that is applied to the net business income for the corporation. For retailers, wholesalers, service providers, and many other business operations, income is apportioned based on a ratio of sales in Mississippi versus sales for the total entity. For manufacturers, income tax is apportioned using a three factored approach that consists of property, payroll, and sales in Mississippi related to everywhere.

After the apportioned net taxable income is calculated, additional non-business income attributable to Mississippi is added to the calculated amount to arrive at the Mississippi net taxable income.


Mississippi Income Tax rates are:

First $5,000 of taxable income        3%
Next $5,000 of taxable income        4%
Remaining taxable income              5%


Credits to Mississippi Income Tax

 

Corporate Franchise Tax

Most corporations engaged in business in Mississippi are subject to franchise tax, as levied in Sections 27-13-5 and 27-13-7 of the Mississippi Code. Franchise tax is a tax that is assessed on the company’s capital value. The capital value for the corporation is calculated based on:

  • Capital stock issued and outstanding; and
  • Paid-in Capital, Surplus, and Retained Earnings, including deferred taxes, deferred gains, deferred income, contingent liabilities, and other true reserves.


For multi-state corporations, capital is pro-rated and applied to the corporation’s total capital value to calculate the amount of capital to be apportioned to Mississippi. The apportioned capital is then multiplied by the franchise tax rate to determine the Mississippi franchise tax liability. 

The franchise tax rate is $2.50 per $1,000 of Mississippi capital.


Credits to Mississippi Franchise Tax



Sales & Use Tax

All tangible personal property sold within the state is considered taxable unless specifically exempted or assigned a reduced rate by state law, as defined in Section 27-65-17 of the Mississippi Code. Similarly, companies doing business in Mississippi that bring tangible personal property into Mississippi are required to pay use tax on that property, as levied in Section 27-67-5 of the Mississippi Code.

Some services are also subject to sales tax in Mississippi, as listed in Section 27-65-23 of the Mississippi Code. Examples of taxable services include software sales and service, repairs of tangible personal property, and renting or leasing tangible personal property

The regular retail sales and use tax rate on goods and services is 7%, but the law does allow for a reduced rate for manufacturing machinery, equipment, and industrial purposes of 1.5%. Sales tax on automobiles in Mississippi is 5%, with truck-tractors and semi-trailers taxed at 3%. 

For commercial construction in Mississippi, there is a contractor’s tax assessed on the construction of commercial real property that is calculated as 3.5% of the contractor’s gross receipts from the construction. The contractor’s tax has no exemptions, and the contractor is allowed to purchase all component building materials exempt from sales tax.


Exemptions from Mississippi Sales and Use Tax

 

Property Tax

Counties and municipalities levy a property tax on real and tangible personal property in Mississippi. Generally, property is assessed at 15% of true value. This assessed value is then multiplied by the millage rate to determine the annual tax liability. Each city and/or county sets its tax rate, or millage. Mississippi does not have a state property tax.


Exemptions from Mississippi Property Tax

Other Taxes and Programs 


Withholding of Personal Income Tax

Mississippi levies a tax on individual income in the state, as required in Section 27-7-5 of the Mississippi Code. Income tax is assessed at the same rate for individuals as it is for business entities. Employers are statutorily required to withhold Mississippi personal income tax from its employees and remit these withholdings directly to the Mississippi State Tax Commission. This tax is a deduction from the employee’s wages, and does not require a contribution from the employer. Specific registration, withholding, and filing requirements can be obtained from the Mississippi State Tax Commission.
 

State Unemployment Compensation Tax

Mississippi levies an unemployment compensation tax on the first $7,000 of an employee’s annual wages, as provided for in Section 71-5-1 of the Mississippi Code. The maximum contribution rate for employers is 5.4%, with the minimum rate equaling 0.9%. Both the state minimum rate and the business’s rate vary from year to year. New employers in the state are assigned an initial rate of 2.7% of wages until the Mississippi Department of Employment Security can compute an actual experience rate for the employer. Rates are recalculated each October and apply to the following year’s wages. Rates are adjusted after two to three years of Mississippi filings, depending upon what time of year the employer begins reporting.


Rebate Programs 

In addition to the tax credits and exemptions listed above, there are also additional programs that provide cash rebates back to eligible companies.


For further details, see the Mississippi Tax Incentives, Exemptions, and Credits on the State Tax Commission’s website http://www.dor.ms.gov/revenue/incentive/2008IncentiveBook.pdf, or contact the State Tax Commission at 601.923.7044 or the Financial Resources Division at financial@mississippi.org or 601.359.3552.

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