Taxes and Credits

Corporate Income Tax

All corporations engaged in 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 is 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
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 a loss. The State, however, does not allow deductions of federal income taxes. There is no county or municipal income tax in Mississippi.

Example (Multi-State Operation)

Assume that a company selling at wholesale has two manufacturing plants, one in Mississippi and one in another state, and that the Mississippi plant accounts for 45% of the property, 40% of the payroll, and 35% of the sales. Assume further that the net business income of the corporation is $500,000. The corporate income subject to Mississippi tax and the amount of tax payable can be calculated as follows:

Ratio of property in Mississippi to total property	.45
Ratio of payroll in Mississippi to total payroll	.40
Ratio of sales in Mississippi to total sales	.35
Sum of the three factors	1.20
Apportionment ratio (1.20/3 = .40)
Business income apportioned to Mississippi ($500,000 x .40) Net taxable income	$200,000
Total Mississippi tax:
3% of first $5,000	$150
4% of next $5,000	200
5% of balance ($190,000)	9,500
Income tax payable to Mississippi	$9,850

EXEMPTIONS

Jobs Tax Credit*

Eligible employers in Mississippi who create a designated number of full-time jobs are eligible for a five-year jobs tax credit, the amount of which will vary depending upon the location of the facility.

The State’s 82 counties have been divided into three categories: Tier III, Tier II, and Tier I. Each category has individual Parameters for both the number of new jobs that must be created and the amount of the tax credit available to eligible employers.

Eligible businesses include manufacturers, processors, distributors, wholesalers, warehousers, research and development facilities, certain telecommunications and data or information processing companies, computer software development enterprises or any technology-intensive facility or enterprise, air transportation and maintenance facilities, final destination or resort hotels having a minimum of 150 rooms, and movie industry studios.

County Classification	# of New Jobs to be Created	Dollar Credit Per New Job
Tier III	10 or more	$2,000 annually
Tier II	15 or more	$1,000 annually
Tier I	20 or more	$ 500 annually

Growth and Prosperity Program (GAP)

The Growth and Prosperity Program is designed for designating certain counties as GAP counties and making incentives available to private companies that locate or expand in those economically challenged areas of the state. County eligibility is based on unemployment rates and poverty level. If a company locates in a GAP county, it will be exempt for a period of 10 years or until December 31, 2015, whichever occurs first, from:

1. All local ad valorem taxes levied by the county, except school taxes and that portion of the ad valorem tax utilized to pay for fire and police protection;
2. All state sales and use taxes imposed related to the purchase of component building materials and equipment; and
3. All state income and franchise taxes.

If the business is in a municipality in the county and the municipality consents, the business will be exempt from all local ad valorem taxes levied by the municipality, except school taxes.

Mississippi Advantage Jobs Incentive Program

The Mississippi Advantage Jobs Incentive Program (Advantage Jobs), administered by the Mississippi Development Authority (MDA) and the Mississippi State Tax Commission (Tax Commission), is designed to provide incentives to eligible companies that promise significant development of the economy of the State of Mississippi (State) through the creation of quality jobs.

In order to qualify for this incentive, the company must provide an annual salary (excluding benefits which are not subject to income tax) to its employees of at least 125% of the most recent State average annual wage or the most recent average annual wage of the county in which the business is located, whichever is less. Also, the company must provide or plan to provide to any new employees a basic health benefit plan. Such plan must be in effect within 180 days of receiving any incentives.

Eligible businesses will receive quarterly incentive payments. The incentives are funded through a diversion of the withholding taxes paid by the qualifying business. The Mississippi Development Authority determines, based on the estimated net direct state benefits of the jobs created, the actual amount of payments. The benefit rates may not exceed 4% of the business’ gross payroll.

National or Regional Headquarters Job Credit*

Out-of state businesses that transfer national or regional headquarters to Mississippi or existing in-state companies which establish national or regional headquarters in the State are eligible for a five-year $500 tax credit for each new full-time position created. A minimum of 35 full-time jobs must be created.

Companies can receive $1,000 for each new full-time job if the company pays 125% of the average annual state wage rate. If the company pays 200% of the average wage of the state, it may receive a $2,000 credit.

Research and Development Jobs Credit*

A five-year, $1000 tax credit is offered for each full-time job created which requires research and development skills.

Job Training Tax Credit*

A 50% income tax credit is offered to a manufacturer which participates in an employer-sponsored retraining program through a community/junior college in the district within which the employer is located.

Child/Dependent Care Income Tax Credit*

An income tax credit of 50% of qualified expenses is offered to any employer providing child/dependent care for employees during working hours. The facility must have an average daily enrollment for the taxable year of no less than six children who are twelve years of age or less; or must serve five or fewer children and/or elderly adults in a family child care/elder care home approved by the Department of Health for participation in the United States Department of Agriculture child and adult nutrition program; and be licensed according to the regulations governing licensure of child care facilities in Mississippi. The Mississippi Department of Health and the State Tax Commission will certify employers as eligible for the tax credit.

*These credits can be used in any combination, but the total combination cannot exceed 50% of the taxpayer’s income tax liability for that year. Any excess credit may be carried forward for five successive years.