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.

No material change to the rule was detected as of this July 2024 review. The source URL has been updated to the current official Mississippi DOR instructions page. Content remains accurate as of July 2024.

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 method is required by Miss. Admin. Code Title 35, Part III, Subpart 08, Chapter 06 and reflected in DOR Form 83-125. Special formulas may apply to certain industries (airlines, pipelines, etc.).

Definition of Business vs Nonbusiness Income Mississippi distinguishes between business and nonbusiness income closely following the substance of UDITPA, though Mississippi has not adopted UDITPA or the Multistate Tax Compact. Under Miss. Code Ann. § 27-7-23(a)(2) and the implementing regulations, "business income" is income arising from transactions in the regular course of the taxpayer’s trade or business (transactional test) or from tangible/intangible property if the acquisition, management, and disposition of the property are integral parts of the taxpayer’s business (functional test). The statute places the burden on the taxpayer to show that income is nonbusiness; all income is business income unless "clearly classifiable" as nonbusiness.

Business income is apportioned under the three-factor formula. Nonbusiness income—such as rents, royalties, interest, dividends, and certain gains not qualifying as business income—is allocated using specific Mississippi statutory rules (for example, interest/dividends to the taxpayer's commercial domicile; gains and royalties based on the property’s situs or use). Detailed allocation categories and examples are provided in Miss. Admin. Code Title 35, Part III, Subpart 08, Chapter 06.

Mississippi Has Not Adopted UDITPA or the Multistate Tax Compact The Department of Revenue makes explicit in its official FAQs that Mississippi is not a Compact or UDITPA state, but the business/nonbusiness tests in the Code and regulations closely track UDITPA’s framework.

Source: Mississippi Code Ann. § 27-7-23 Source: Miss. Admin. Code Title 35, Part III, Subpart 08, Ch. 06 (Allocation & Apportionment) Source: Mississippi DOR, Business Tax Frequently Asked Questions

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No material change to the rule was found upon June 2024 review. PDF link updated to current official URL as of this update. Content remains accurate as of June 2024.

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

Mississippi C‑corporations file their combined corporate income and franchise tax return on or before the 15th day of the 4th month following the close of the taxable year. For calendar-year filers, that means a return with a 12/31 year‑end is due April 15. Extensions of time to file are allowed—either via Mississippi's own extension or by attaching the federal extension—but do not extend the time to pay any tax due; the tax must still be remitted by the original due date. Source: Mississippi Department of Revenue, Business Tax Frequently Asked Questions

Corporate taxpayers with annual income tax liability exceeding $200 must make estimated tax payments equal to at least 90% of the current year liability, in four installments due on the 15th day of the 4th, 6th, 9th, and 12th months of the taxable year. A safe harbor is provided: no interest is charged if the corporation paid, via timely estimated payments, an amount at least equal to the prior year's liability (if the prior year covered 12 months). Underpayment or late payment may result in penalty and interest. Source: Mississippi Administrative Code, Title 35, Part III, Subpart 11, Chapter 21

Franchise tax has no separate estimated payment requirement—both franchise tax and any unpaid income tax must be paid by the original return due date (without regard to extensions) to avoid penalties and interest. Source: Mississippi DOR, Combined Income Filing

No changes to substantive rules detected as of June 2024. All URLs repaired to current official DOR publications as of this update.

Mississippi law allows affiliated corporate groups to elect to file either a consolidated or combined income tax return under specific conditions, and the Department of Revenue may require combined filing in cases of abuse.

Consolidated versus Combined Returns Mississippi Code Ann. § 27-7-37 distinguishes between "consolidated" and "combined" returns. A consolidated return may be elected only if all affiliated corporations exclusively do business in Mississippi. A combined return may be elected if at least one affiliate is subject to tax in another state. In either case, each corporation’s business income or loss is first determined separately according to Mississippi allocation and apportionment rules, and then the separate-company results for affiliates are aggregated to determine group Mississippi net business income. Nonbusiness income allocable to Mississippi is then added to arrive at total Mississippi taxable income for the group. The election must be made in accordance with rules and forms prescribed by the Department. [Miss. Code Ann. § 27-7-37(2)(a)]

Commissioner’s Authority to Require Combined Returns If the Department finds by a preponderance of the evidence that affiliated corporations have shifted income among themselves—meaning intercompany transactions reduce Mississippi taxable income through arrangements lacking a bona fide business purpose—the Commissioner may require the group to file a combined return, but only through regulations. Penalties for deficiencies due to required combined filing only apply where there is no reasonable basis for the original filing method or the intercompany transaction lacks a legitimate non-tax business purpose. [Miss. Code Ann. § 27-7-37(3)-(4)]

Administrative Procedures Mississippi Administrative Code Title 35, Part III, Subpart 08, Chapter 07 provides that the separate-company computation applies for each affiliate, which is then aggregated to the group’s taxable income. Franchise tax must always be reported and paid on a separate-company basis—there is no consolidated or combined franchise tax return in Mississippi. Additional administrative requirements for the election include alignment of taxable years among affiliates, submission of detailed member schedules, and adherence to Department form instructions.

Source: Miss. Code Ann. § 27-7-37; Miss. Admin. Code 35-3-08-07-100; Mississippi DOR, Combined Income Filing

Review Status: Not yet human confirmed.

Corporations whose only Mississippi activity is the solicitation of orders for sales of tangible personal property—when those orders are sent outside the state for approval and are fulfilled from out of state—are protected from Mississippi corporate income tax by Public Law 86-272 (15 U.S.C. §§ 381–384). However, this federal statute does not exempt such corporations from the obligation to file a Mississippi corporate income and franchise tax return, nor does it shield them from Mississippi franchise tax liability.

Filing obligation Mississippi requires every corporation "doing business," "earning income," or existing in the state to file a combined income and franchise tax return (Form 83-105), regardless of P.L. 86-272 protection for income tax. According to the Mississippi Department of Revenue, even if a corporation has no Mississippi taxable income because all of its activities are protected by P.L. 86-272, it must still file if it otherwise meets the state’s filing criteria. Termination of filing obligations requires withdrawing or dissolving through the Secretary of State.

Franchise tax not shielded by P.L. 86-272 Franchise tax in Mississippi is imposed on the value of capital employed in the state and is not a net income tax (Miss. Code Ann. § 27-13-5 et seq.), so it falls outside P.L. 86-272. As a result, out-of-state corporations protected from income tax may still owe franchise tax if they are regarded as "doing business" in Mississippi—even if their business activities are limited to solicitation activities protected for income tax purposes.

Authority and support

• Mississippi Administrative Code and DOR instructions confirm the continuing filing duty even for corporations shielded from income tax under P.L. 86-272, unless they formally withdraw.
• The Department’s Business Tax Frequently Asked Questions and annual instructions expressly state that P.L. 86-272 does not apply to franchise tax, and protected corporations must continue to file if otherwise required.

Source: Mississippi DOR, Business Tax Frequently Asked Questions Source: 2025 Corporate Income and Franchise Tax Instructions, p. 1–2, 11

Review Status: Not yet human confirmed. All supporting URLs verified or updated as of July 2024. No material change to the P.L. 86‑272 filing obligation or franchise tax rules detected.

Mississippi applies its graduated corporate income tax brackets on a per-entity basis, not across a controlled group or affiliated group. Even when affiliates elect or are required to file a combined Mississippi income tax return under Miss. Code Ann. § 27-7-37, each corporation’s Mississippi taxable income is computed separately following standard allocation and apportionment rules, and the tax brackets apply to each member individually. No Mississippi statute, regulation, or Department of Revenue (DOR) guidance provides for aggregation or 'stacking' of bracket thresholds for controlled groups, in contrast to federal law (e.g., IRC § 1561) or some other states.

Statutory and regulatory basis Mississippi Code Annotated § 27-7-37 permits two or more affiliated corporations to elect to file a combined income tax return, specifying: “Each corporation’s business income or loss shall be determined separately … and then such amounts shall be combined for the group.” (Miss. Code Ann. § 27-7-37(2)(a)). The statute repeatedly describes computation of taxable income and application of apportionment as a separate-entity calculation, with no language altering or allocating the tax bracket structure among group members. Departmental regulations at Miss. Admin. Code Title 35, Part III, Subpart 08, Ch. 07 also provide for separate-company computation before aggregation, with no bracket-sharing rule.

Department guidance and forms The Department’s annual instructions for Form 83-105 (Corporate Income and Franchise Tax Return) reiterate separate-entity computation for each member included in combined or consolidated returns, directing filers to calculate each corporation’s taxable income before aggregation. The official DOR Combined Income Filing landing page and related FAQs describe group reporting in detail but are silent on any mechanism for sharing or stacking graduated tax brackets among affiliates. No published guidance indicates a bracket-sharing or anti-avoidance regime for this purpose.

Authority silence A thorough review of Mississippi statutes, administrative code, official instructions, and current DOR web guidance did not identify any controlled-group bracket sharing requirement. The conclusion is supported by consistent separate-entity computation in all public authority and the complete absence of any aggregation or anti-avoidance provision paralleling federal controlled-group stacking rules.

Source: Miss. Code Ann. § 27-7-37 (see subsec. (2)(a)) Source: Miss. Admin. Code 35-3-08-07-100 (Combined Returns) Source: Mississippi DOR, Combined Income Filing Source: 2025 Corporate Income and Franchise Tax Instructions, p. 3, 5

Not yet human confirmed. No material rule change detected through July 2024, but link to DOR landing page updated and specific statutory and regulatory support clarified for 2024–2025 return years.

Mississippi permits—but does not require—elective combined (sometimes referred to as unitary) reporting for corporate income tax purposes. Combined or consolidated returns are governed by Mississippi Code Annotated § 27-7-37 and Department regulations (35 Miss. Admin. Code Part III, Subpart 08, Ch. 07). The franchise tax, however, cannot be reported on a combined or consolidated basis—each corporation remains separately liable for its franchise tax.

Elective combined and consolidated returns Mississippi law allows two or more affiliated corporations to elect to file either a consolidated or combined income tax return. A consolidated return may be elected if all affiliates do business only in Mississippi. If at least one affiliate is subject to income tax in another state, the group may elect a combined return. These elections are made under Miss. Code Ann. § 27-7-37 and related Department regulations. The election is generally binding for subsequent years unless permission is granted to change.

Scope and Calculation Combined returns are computed on a separate-company basis: each corporation determines its apportioned Mississippi taxable income using the state's allocation and apportionment rules, and the affiliated group members' incomes are then aggregated. Mississippi does not impose a mandatory water’s-edge or worldwide unitary combination rule. Combined reporting is elective under the described conditions, and is not required or permitted on a worldwide or unitary basis except as the affiliated group determines when electing combined filing.

Franchise tax must be reported separately Combined or consolidated franchise tax reporting is not permitted. Each corporation, including members of a combined income group, must separately file and pay franchise tax on its Mississippi capital base.

Department authority to require combined returns In cases of tax avoidance or abuse (e.g., income shifting among affiliates), the Department may require combined filing but must promulgate regulations to invoke this authority.

Source: Miss. Code Ann. § 27-7-37; Miss. Admin. Code 35-3-08-07-100; Mississippi DOR, Business Tax FAQs

Not yet human confirmed.

Mississippi allows corporate taxpayers to carry forward net operating losses (NOLs) to offset Mississippi taxable income in future years, but does not allow NOL carrybacks. The primary statute governing NOL treatment is Miss. Code Ann. § 27-7-17(4). For tax years beginning on or after January 1, 2017, NOLs may be carried forward up to five years following the loss year. There is no carryback provision for NOLs incurred in 2017 or later years.

Carryforward period Under Miss. Code Ann. § 27-7-17(4)(a), a corporate taxpayer may use an NOL generated in Mississippi against taxable income in the five subsequent tax years. Any NOL or portion thereof that is not used within that period expires and cannot be used in future years. The NOL deduction is applied against Mississippi net income computed before the NOL deduction itself.

No carryback For losses incurred in tax years 2017 and after, Mississippi does not permit NOL carrybacks. As of the same effective date, NOLs generated in prior years that were still eligible may be subject to the old 2-year carryback and 15-year carryforward period, but for current law purposes (2017 and forward), carrybacks are no longer available and the carryforward period is five years.

Federal conformity and special issues Mississippi does not fully conform to federal NOL rules. Important differences include:

• No indefinite carryforward (unlike federal post-2017 changes)
• NOLs may only offset income apportioned and allocated to Mississippi
• There is no provision for consolidated or combined NOLs among affiliated groups (each entity’s NOL determined separately)
• S corporations and pass-through entities do not claim a corporate NOL deduction at the entity level

Authority and application Mississippi Department of Revenue instructions for Form 83-105 restate these rules and direct taxpayers to compute NOLs by referencing Mississippi net taxable income rather than federal taxable income, and the deduction must be claimed in the earliest year available.

Source: Miss. Code Ann. § 27-7-17(4) Source: 2025 Corporate Income and Franchise Tax Instructions, p. 5

Not yet human confirmed. Practitioners should check for legislative changes affecting deduction ordering or years allowed, but this reflects Mississippi authority as of June 2026.