Mississippi imposes both corporate income tax and franchise tax on corporations operating in the state. Any C corporation incorporated in Mississippi or engaged in business within the state must file returns. Corporate income tax is charged at progressive rates of 0%, 4%, and 5% depending on income levels, while the franchise tax is measured on capital employed within the state. Filing deadlines, estimated tax requirements, and penalties apply for noncompliance.
Pass-through entities, such as S corporations, partnerships, LLCs, and LLPs, are not taxed at the entity level in Mississippi. Instead, income flows to individual owners, who must report and pay tax through personal returns. Estimated tax payments, extensions, and penalties mirror those applicable to corporations.
This blog explains Mississippi’s taxation structure in detail, focusing on corporate income and franchise tax obligations along with rules for pass-through entities.
Corporate Income Tax
Filing Requirement:
C corporations must file a Mississippi Corporate Income and Franchise Tax Return if they have any income or activity in the state, or if they are incorporated there. All foreign corporations doing business in Mississippi are also subject to taxation.
Corporate Income Tax Rate:
The state uses a progressive rate structure:
- First USD 5,000: 0%
- Next USD 5,000: 4%
- Income exceeding USD 10,000: 5%
Franchise Tax:
The franchise tax is assessed on the value of capital employed in Mississippi, including surplus, undivided profits, and reserves.
- Rate: USD 1.50 per USD 1,000 of capital in excess of USD 100,000.
- Minimum tax: USD 25.
Due Date:
Returns are due by the 15th day of the 4th month following the end of the tax year.
Form Used:
- Corporations must file Form 83-105 – Mississippi Corporate Income and Franchise Tax Return.
Extension:
- To obtain extra time, corporations must file Form 83-180 – Application for Extension of Time to File.
- The extension provides six additional months but does not extend the time to pay taxes due.
Estimated Tax Payments:
- Required if annual liability is expected to exceed USD 200.
- Payments must be made quarterly on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year.
Penalties and Interest:
- Failure to pay on time: 0.5% per month, up to 25% of unpaid tax.
- Failure to file a return: 5% per month, capped at 25%, with a minimum penalty of USD 100.
- Interest: 0.5% per month on late payments, continuing until fully paid.
Pass through entity Tax
Mississippi does not impose entity-level income tax on S corporations, partnerships, LLCs, or LLPs. Instead, income flows directly to shareholders, partners, or members, who report it on their personal tax returns.
Individual Filing Requirement:
- Mississippi residents file Form 80-105 – Resident Individual Income Tax Return.
- Nonresidents with Mississippi income also report their share.
Due Date:
- Returns are due on April 15, consistent with the federal deadline.
Extension:
- Individuals may request a six-month extension by filing Form 80-106 – Application for Automatic Extension.
- Like corporate rules, extensions apply only to filing, not to payment.
Estimated Tax Payments:
- Required if annual liability is expected to exceed USD 200.
- Payments are due quarterly on the 15th day of the 4th, 6th, 9th, and 1st months of the following year.
Penalties and Interest:
- The same rules apply as for corporations:
- 0.5% monthly interest on unpaid taxes.
- 0.5% penalty per month for late payment, up to 25%.
- 5% penalty per month for late filing, capped at 25%.
Conclusion
Mississippi enforces a dual system of corporate income and franchise taxes, ensuring businesses with operations in the state contribute fairly. Corporations must file Form 83-105, pay income tax at progressive rates, and meet franchise tax obligations based on capital employed. Estimated payments are required once liabilities exceed USD 200, and penalties apply for late filing or payment.
Pass-through entities are taxed differently, with income reported at the individual level rather than at the entity level. Shareholders and partners must remain diligent about filing personal returns, making estimated payments, and meeting deadlines to avoid penalties.
The system highlights three key principles:
- Every corporation with Mississippi activity is taxable.
- Franchise tax obligations apply to capital employed in the state.
- Pass-through taxation ensures income reaches individuals for personal reporting.
By staying on top of filing requirements, payment schedules, and extension rules, businesses and individuals can maintain compliance and avoid unnecessary costs in Mississippi.
