Key figures
Mississippi advisory
2026, with sources
Falling rates
Mississippi is in the middle of two phase-downs. The individual income tax, a flat rate on income over $10,000, is 4.0% for 2026 and scheduled to fall a quarter point a year to 3.0% in 2030 under HB 1 (2025). The franchise tax on corporate capital is $0.50 per $1,000 in 2026 and repealed for tax years beginning in 2028.
An example
A two-founder Delaware startup hires its first engineer in Oxford. It obtains a certificate of authority ($500), registers with the Department of Revenue through TAP for withholding and corporate tax, with MDES for unemployment insurance, and reports the hire within 15 business days. Its first annual report is $25. Because it sells SaaS hosted on a cloud provider outside Mississippi, it has no Mississippi sales tax to collect on subscriptions.
Where founders go wrong
Mississippi’s quirks are small and specific.
- Missing the throwback rule and under-apportioning income to Mississippi.
- Using the federal $600 threshold for 1099s to Mississippi instead of the state’s $3,000 personal services threshold.
- Assuming all software purchases are exempt: downloaded or locally hosted software is still taxable.
The federal baseline
This page covers what Mississippi adds. The federal rules underneath it apply here too.
Common questions
How is Mississippi’s tax picture changing?
Mostly through rates. HB 1 (2025) set the individual rate at 4.0% for 2026, stepping down a quarter point a year to 3.0% in 2030, with further cuts after that only if revenue triggers are met. The franchise tax is in its final years before repeal in 2028.
Does Mississippi tax SaaS?
Since July 1, 2023, computer software maintained on a server outside Mississippi and accessed only over the internet is neither a taxable sale nor a taxable use. Most SaaS, PaaS and IaaS is therefore outside the tax for both sellers and buyers, but software hosted on a server in Mississippi, or downloaded, is taxable.
Advisory next door
- ALAlabama advisoryAlabama is easy on federal conformity and deducts federal tax, but its self-administered local taxes, seven-day new-hire rule and unsettled treatment of SaaS are where startups trip.
- ARArkansas advisoryArkansas incentives are application-based through AEDC. Ten-year NOLs and no bonus depreciation make Arkansas losses something to model, not assume.
- LALouisiana advisoryLouisiana’s R&D credit is worth up to 30% of in-state research spending above a base amount, but LED certifies it first and claims share a $12 million statewide cap each fiscal year. The 2025 reform is the backdrop for every other decision.
- TNTennessee advisoryTennessee has no tax on wages and a lighter franchise tax since 2024, but entities still pay franchise, excise and gross-receipts business tax, and SaaS is subject to sales tax.
Founder guides on this
- Sales taxSales tax nexus for startups: when you owe tax in a stateSince Wayfair, selling into a state can create a sales tax obligation. How economic nexus works, why SaaS is taxable in some states and when to register.
- RunwayBurn rate and runway: how to calculate them correctlyGross burn, net burn and months of runway, done the way an investor checks them: from cash, averaged, and with the hires you’ve already committed to.
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
More of the Mississippi guide
- AccountingAccounting and state tax in MississippiCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in MississippiSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in MississippiPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in MississippiWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in MississippiRegistering to do business, annual reports, franchise tax and the filing calendar
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- EY Tax News — Mississippi HB 1 (2025) personal income tax rate reductions
- Mississippi Department of Revenue — Business Tax Frequently Asked Questions
- EY Tax News — Mississippi SB 2449 (2023): computer software and remotely accessed software
- Mississippi State Directory of New Hires — Reporting Fundamentals
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.