Mississippi — Corporate Income / Franchise Tax

Mississippi imposes two separate taxes on corporations: a corporate income tax and a franchise tax. Every corporation either registered to do business in Mississippi or otherwise doing business in the state must file a combined income and franchise tax return (Form 83-105). The corporate income tax applies to net taxable income derived from business activities in Mississippi. The franchise tax—scheduled for repeal effective January 1, 2028—is imposed on the value of capital used, invested, or employed in the state and applies separately to both domestic and foreign corporations. S corporations and partnerships generally are not subject to corporate-level income tax but may be subject to different rules; qualified subchapter S subsidiaries are exempt from the return filing requirement.

Source: Miss. DOR, Corporate Income and Franchise Tax; 2025 Corporate Income and Franchise Tax Instructions (citing Miss. Code Ann. § 27-7-1 et seq., § 27-13-1 et seq.)

Mississippi imposes a graduated corporate income tax under Miss. Code Ann. § 27-7-5. The highest marginal rate is 5%, which applies to taxable income over $10,000. This rate applies to C corporations; electing pass-through entities may also be subject to these rates when paying tax at the entity level. The exact bracket structure and lower-tier rates are set forth in the statute.

Source: Miss. DOR, 2025 Pass-Through Entity Income and Franchise Tax Instructions, p. 3 (citing Miss. Code Ann. § 27-7-5)

For tax year 2022 and all subsequent years, Mississippi imposes corporate income tax on taxable income under a three-bracket structure: $0 to $5,000 at 0%; over $5,000 to $10,000 at 4%; and over $10,000 at 5%. These are marginal rates; income in each bracket is taxed at that bracket's rate. The rates apply to C corporations and to electing pass-through entities paying tax at the entity level under Miss. Code Ann. § 27-7-26.

Source: Miss. Code Ann. § 27-7-5, cited in Miss. DOR 2025 Corporate Income and Franchise Tax Instructions, p. 3

Mississippi apportions the business income of multistate corporations using a three-factor formula: property, payroll, and sales, equally weighted. Each factor is calculated as a ratio (Mississippi numerator ÷ total denominator), and the three ratios are summed and divided by three to determine the apportionment percentage. This equal-weighting method is prescribed in Miss. Admin. Code Title 35, Part III, Subpart 08, Chapter 06 and reflected in the 2025 Form 83-125. Special formulas apply to airlines, motor carriers, pipelines, and certain other industries. The formula applies only to business income; nonbusiness income (e.g., rents, royalties, capital gains, dividends) is allocated directly under Miss. Code Ann. § 27-7-23.

Source: Miss. DOR Form 83-125, Business Income Apportionment Schedule (2025); 2025 Corporate Income and Franchise Tax Instructions, citing Miss. Code Ann. § 27-7-23 and Miss. Admin. Code Title 35, Part III, Subpart 08, Chapter 06

Mississippi imposes corporate income and franchise tax filing obligations on corporations "doing business" in the state. The Mississippi Department of Revenue defines "doing business" for income tax purposes as "the operation of any enterprise or activity in Mississippi for financial profit or economic gain." The Department's Business Tax FAQs state that the terms "doing business" and "nexus" have the same meaning and direct taxpayers to Mississippi Income Tax Regulation Title 35 Part III Subpart 08 Chapter 06 for a list of examples of activities that constitute nexus.

Who must file

All corporations, associations, or entities doing business, earning income, or existing in Mississippi are required to file a corporate income and franchise tax return. Every corporation—whether domesticated or qualified to do business in Mississippi—must file a return even if the corporation is inactive or not engaged in business. The Department's FAQ confirms that a corporation remains subject to the filing requirement until it is officially dissolved or withdrawn through the Mississippi Secretary of State.

Physical presence creates nexus

Having an employee in Mississippi creates nexus for corporate income tax purposes. The Department has published a nexus questionnaire that taxpayers may request to help determine whether their activities create a filing obligation in Mississippi. The FAQ does not specify a dollar-threshold economic nexus standard for corporate income tax, in contrast to the $250,000 gross-sales threshold that applies to remote sellers for Mississippi sales tax.

Qualified subchapter S subsidiaries

Qualified subchapter S subsidiaries (QSSSs) are exempt from the requirement to file a Mississippi corporate income and franchise tax return. Every other corporation either registered to do business in Mississippi or otherwise doing business in the state must file a combination income and franchise tax return (Form 83-105).

P.L. 86-272 considerations

Public Law 86-272, a federal statute, restricts states from imposing net income tax on an out-of-state business if its only activity in the state is the solicitation of orders for sales of tangible personal property, which orders are sent outside the state for approval and are filled by shipment or delivery from outside the state. Because P.L. 86-272 applies only to net income taxes, it does not shield a corporation from Mississippi franchise tax. A corporation protected by P.L. 86-272 from Mississippi income tax may still owe Mississippi franchise tax if it meets the "doing business" standard for franchise tax purposes.

Source: Miss. DOR, Business Tax Frequently Asked Questions

Mississippi imposes a franchise tax on corporations doing business in the state, measured by the value of capital employed in Mississippi. The tax is scheduled for complete repeal effective January 1, 2028, under a phased reduction that began in 2018.

Current and future rates

The franchise tax rate has been reduced annually since 2018 and continues to decline through 2027:

• Tax Year 2025: $0.75 per $1,000 of taxable capital in excess of $100,000
• Tax Year 2026: $0.50 per $1,000 of taxable capital in excess of $100,000
• Tax Year 2027: $0.25 per $1,000 of taxable capital in excess of $100,000
• Tax Year 2028 and after: Franchise tax repealed effective January 1, 2028

The first $100,000 of capital has been exempt from the franchise tax since tax year 2018. This exemption eliminates franchise tax liability for many smaller corporations.

Historical rates (2018–2024)

The phaseout schedule that began in 2018 reduced the rate by $0.25 per year:

• Tax Year 2024: $1.00 per $1,000 (in excess of $100,000)
• Tax Year 2023: $1.25 per $1,000 (in excess of $100,000)
• Tax Year 2022: $1.50 per $1,000 (in excess of $100,000)
• Tax Year 2021: $1.75 per $1,000 (in excess of $100,000)
• Tax Year 2020: $2.00 per $1,000 (in excess of $100,000)
• Tax Year 2019: $2.25 per $1,000 (in excess of $100,000)
• Tax Year 2018: $2.50 per $1,000 (in excess of $100,000)

Before 2018, the rate was $2.50 per $1,000 with no exemption threshold.

Tax base: value of capital employed

Under Miss. Code Ann. § 27-13-9, the franchise tax is calculated on the basis of the value of capital employed in Mississippi for the year preceding the date of filing the return. The tax base is measured by the combined issued and outstanding capital stock, paid-in capital, surplus, and retained earnings.

In computing capital, corporations must include deferred taxes, contingent liabilities, and all true reserves (including reserves other than for definite known fixed liabilities that do not enhance the value of assets). Amounts designated for the payment of dividends are not excluded until they are definitely and irrevocably placed to the credit of stockholders, subject to withdrawal on demand.

The franchise tax is computed on the greater of (1) the value of capital employed in excess of $100,000, or (2) the assessed property values in Mississippi. Corporations use the ending-year balance sheet to compute franchise taxes as of the accounting year end.

Multistate apportionment

For multistate corporations, the capital base must be apportioned to Mississippi. The Mississippi Department of Revenue's Business Tax FAQ confirms that multistate corporations apportion taxable capital using a two-factor formula consisting of the real and tangible personal property ratio and the gross receipts ratio. This apportionment method differs from the three-factor formula (property, payroll, and sales) used for corporate income tax apportionment.

Minimum tax

The minimum franchise tax is $25, regardless of the amount of capital employed. Even corporations with capital below the $100,000 threshold or with zero calculated tax must pay the $25 minimum if they are subject to the franchise tax filing requirement.

Applies to both domestic and foreign corporations

The franchise tax applies to both domestic corporations (organized under Mississippi law) and foreign corporations (organized under the laws of another state or country) that are doing business in Mississippi. Miss. Code Ann. § 27-13-5 imposes the tax on domestic corporations; Miss. Code Ann. § 27-13-7 imposes it on foreign corporations. S corporations and other pass-through entities are subject to the franchise tax even though they are not subject to corporate-level income tax.

Source: Miss. DOR, 2025 Corporate Income and Franchise Tax Instructions, pp. 4–5 (citing Miss. Code Ann. § 27-13-5, § 27-13-7, § 27-13-9); Miss. DOR, Business Tax Frequently Asked Questions