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Tax And Business Climate In Mississippi



Monika Miles

This month we travel to the land of Dixie, the southern state of Mississippi. The state is heavily forested with over half of the state’s area covered by wild trees including mostly pine, as well as cottonwood, elm, hickory, oak, pecan, sweetgum and tupelo.

The Mississippi River delta region is considered home of the blues music, where this type of music is honored at the Delta Blues Museum in Clarksdale. This region is also one of the top casino destinations between Las Vegas and Atlantic City. Many well-known and diverse singers came out of Mississippi including Elvis Presley, alternative rock band 3-Doors Down, Jimmy Buffet and Opera Singer Leontyne Price.

The hills region in the northeast part of the state is covered in natural wooded forests and the peaceful waters of Pickwick Lake. The green pine woodlands of east-central Mississippi provide endless outdoor recreational activities and world-class golf. In addition to lush forests, the Pines region is filled with historical sites and authentic Southern restaurants.

The bulk of Mississippi is composed of lowlands, the highest point being Woodall Mountain, in the foothills of the Cumberland Mountains, 807 feet above sea level. The lowest point is sea level at the Gulf Coast. The state’s mean elevation is 300 feet above sea level, the result being frequent flooding along the “Big Muddy” (Mississippi River).

Business Climate

The legislature’s 1990 decision to legalize casino gambling along the Mississippi River and the Gulf Coast has led to increased revenues and economic gains for the state. Gambling towns in Mississippi have attracted an increased amount of tourism, flocking to the Gulf Coast resort towns of Bay St. Louis, Gulfport and Biloxi and the Mississippi River towns of Tunica (the third largest gaming area in the United States), Greenville, Vicksburg and Natchez.

In 2012, Mississippi had the 6th largest gambling revenue of any state, with $2.25 billion. The federally recognized Mississippi Band of Choctaw Indians has established a gaming casino on its reservation to support education and economic development.

Aside from gambling, the state is a leader in car manufacturing. The largest automotive plants are the Toyota Mississippi Plant in Blue Springs and a Nissan Automotive Plant in Canton.

Although the state has made great gains in diversifying its economic base, agriculture, once the main source of income, continues to contribute to the strengthening economy of the state. The state’s most valuable crops are cotton and soybeans. Production of cotton generates about 13% of the state’s total agricultural receipts, ranking Mississippi as the 3rd highest cotton producing state. Other significant crops grown in the state include grain, rice and sweet potatoes, hay and peanuts.

Mississippi is also a leading shrimp producer. The state is also known for its saltwater products that include menhaden, oysters and red snapper. Although severely impacted by the “Deep Water Horizon” oil spill more than a decade ago, the industry has bounced back very well. Freshwater catches include buffalo fish, carp and catfish.

Tax Climate

Mississippi collects personal income tax in three tax brackets, ranging from 3% to 5%, compared to California’s rate of 13.3%. The retail sales tax rate in the state is 7%, compared to California’s rate of 7.25%. Corporations in the state are subject to tax rates ranging from 3% to 5%, compared to California’s rate of 8.84%. Corporations also must pay a corporation franchise tax. However, depending upon its legal form, a business may be subject to one, both or neither of these taxes.

Property taxes in Mississippi vary by county. The median property tax in the state is $508 per year for a home worth the median value of $98,000.

Other taxes that are of interest to consumers are the gasoline and cigarette tax. Residents of the state pay 37.19 cents in the state and federal taxes on every gallon. This is about 11 cents a gallon less than the national average. An excise tax is imposed on cigarettes and all tobacco products other than cigarettes manufactured or imported into Mississippi at a rate of 3.4 cents per cigarette or sixty-eight cents per pack of 20 cigarettes and for other tobacco products, 15% of manufacturer’s list price.

With Mississippi’s growing economy, it is a popular state for out state businesses to sell their products to in-state customers, but there are tax consequences for our technology clients. Prewritten software that is downloaded electronically is taxable. Additionally, custom software that is downloaded electronically is taxable. Software-as-a-Service appears to be taxable, although little guidance has been issued. Digital products that are comprised of books, audio works and audio visual works are taxable. Digital products that are comprised of magazines and newspapers are not taxable. In conclusion, Mississippi is fairly aggressive when it comes to taxing products brought into the state.

Tax Incentives and Credits

Businesses in Mississippi may be able to take advantage of several tax credits. Some of these include:

Mississippi Tourism Rebate Program– The Mississippi Tourism Rebate Program provides a tax rebate to qualified applicants of new tourism-oriented projects in the state. The program allows for a portion of the sales tax paid by visitors to the eligible tourism-oriented enterprise to be paid to the applicant as reimbursement for eligible costs incurred during the construction of the project. More information on this incentive program can be found here.

Job Protection Grant– The Job Protection Grant Program provides funding to “at risk” industries in the state to assist them in retaining jobs and improving their productivity. To be eligible, a business must have operated in the state for at least three years and have lost jobs or be at risk of losing jobs because such jobs have been relocated to industries in foreign countries. More information on this incentive program can be found here.

Our team at Miles Consulting Group is always available to discuss the specifics of your situation, whether in Mississippi or other U.S. States, and help you navigate the complex tax structures arising from multistate operations. Call us to help you achieve the best tax efficiencies.

Random Facts

  • Root Beer was invented in Biloxi in 1898 by Edward Adolf Barq, the namesake of Barq’s Root Beer.
  • Elvis Presley was born in Tupelo on January 8, 1935.
  • The state has about 27 tornadoes annually.
  • The Mississippi Gulf Coast is the world’s largest man-made beach.

Monika founded Miles Consulting Group in 2002. The firm focuses on multi-state tax consulting—helping their clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for over 11 years in Big 4 Public Accounting and 1 year in industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.

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