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Summary of Mississippi Tax Incentives
Some of the incentives listed below vary according to the development status of the counties. A list of the counties and their development status is attached. The county status will be re-assessed annually by the Mississippi State Tax Commission, according to each county's unemployment rate and per capita income averages over the prior three years.
I. State Corporate Income Taxes
Note that the tax credits described in items A-C below are limited to an amount not greater than 50% of the taxpayer's state income tax liability for the year in which the credits are taken.
A. Jobs Tax Credit. Provides a five-year tax credit to the company's state income tax bill for each new job created by a new or expanding business, effective for years two through six after the creation of the job. The amount of credit depends on the development status of the county in which the business is located: (1) $2,000 per new job for less developed counties, (2) $1,000 per new job for moderately developed counties, and (3) $500 per new job for developed counties. A minimum number of new jobs must be created to be eligible for this credit. In less developed counties, businesses must create at least 10 new jobs to be eligible for the credit; in moderately developed counties, 15 new jobs; and in developed counties, 20 new jobs.
B. R&D Jobs Tax Credit. Provides an additional five-year tax credit of $500 per year' for each net new R&D job created by new or expanding businesses, effective for years two through six after the creation of the job. There is no minimum number of R&D jobs required to be eligible for this credit. To qualify for this credit, a business must first meet Mississippi State Tax Commission regulations defining the eligible R&D jobs.
C. Headquarters Jobs Tax Credit. Provides an additional five-year tax credit of $500 per year for each net new job created by the transfer of a national or regional headquarters to Mississippi, provided that at least 35 full-time jobs are created which are in support of the national or regional headquarters. The credit is effective for years two through six after the creation of the job.
D. Child/Dependent Care Tax Credit. An income tax credit of 50% of qualified expenses is offered to any employer providing child/dependent care for employees during working hours. The facility must have an average daily enrollment for the taxable year of no fewer than six children who are twelve years of age or less; or must serve five or fewer children and/or elderly adults in a family child care/elder care home approved by the Department of Health for participation in the United States Department of Agriculture child and adult nutrition program; and be licensed according to the regulations governing licensure of child care facilities in Mississippi. Employers will be certified as eligible for the tax credit by the Mississippi Department of Health and the State Tax Commission.
E. Basic Skills Training Tax Credit. Provides a tax credit to new or existing businesses that pay for certain basic skills training or retraining for their employees. Credit is equal to 25% of qualified expenses of the training. Training programs must be certified by the State Department of Education to qualify the business for this credit.
F. Rural Economic Development Credits. Through certain types of bond financing agreements, the company's state income tax liability may be reduced by an amount equal to the annual bond debt service payments.
G. Mississippi State Port Income Tax Credit. Provides an income tax credit to taxpayers who utilize the port facilities at state, county and municipal ports in Mississippi. The taxpayer receives a credit in an amount equal to certain charges paid by the taxpayer on export cargo.
II. County Property Taxes
A. For new or expanding manufacturers, certain properties may be exempted from property taxes, except school taxes, for up to ten years at the local option. (Mississippi does not have a state property tax.) Exemptible property includes real and tangible personal property, except for finished products and rolling stock (i.e., highway vehicles).
B. Local authorities may grant a fee in lieu of taxes, including school taxes, on projects over $100 million, subject to approval by the Mississippi Department of Economic and Community Development.
C. Free Port Warehouse Law. Exempts finished goods from property taxes, including school taxes. Upon application, a license will be issued to qualified companies.
III. State Sales Taxes
The general retail sales tax rate in Mississippi is 7%. Exemptions to sales taxes for manufacturers are as follows:
A. There is no sales tax on purchases of raw materials, processing chemicals, or packaging materials.
B. Manufacturers pay a 1.5% sales tax on the following items:
1. Machinery and parts used directly in manufacturing and port operations (purchase or rental).
2. Industrial electricity, natural gas, and fuels.
C. Manufacturers pay a 3.5% contractor's fee for all costs (exceeding $10,000) included in a contractor's construction contract, including the costs of construction labor and the purchases of construction component materials made by the contractor on behalf of the manufacturer.
D. New or expanding manufacturers located in less developed counties pay no sales taxes for: (1) building construction materials, or (2) purchases of machinery or equipment associated with a location or expansion, if the building materials or equipment are purchased directly from a supplier (purchases of construction materials made through a contractor incur the 3.5% contractor' s fee.)
E. New or expanding manufacturers located in either moderately developed or developed counties pay: (1) 3.5% sales tax for purchases of building construction materials and new machinery or equipment not used directly in the manufacturing process, and (2) 0.75% sales tax on purchases of all machinery and equipment that is used directly in the manufacturing process.
F. Companies that transfer regional or national headquarters to Mississippi are exempted from sales taxes on purchases of construction materials, machinery, and equipment related to that headquarters facility, provided that the transfer creates at least 35 new jobs which are in support of the headquarters function and provided that these purchases are made directly from the supplier. The exemption is effective from the time the application is approved until 90 days after the designated start-up time.
G. Bond-financed properties are fully exempt from sales taxes on purchased construction materials and machinery and equipment through the end of the construction period, provided that these purchases are made directly from the supplier.
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