Business Incentives

"Today, it takes more brains and effort to make out the income-tax form than it does to make the income."

- Alfred E. Neuman

"Incentives do not make a bad deal good, they make a good deal better."

- Gray Swoope, Executive Director of the Mississippi Development Authority

Incentives play an important part of the site location/expansion process. Incentives should not be confused with location or community attributes. While location alone is vital to defining proximity to customers and/or resources, it should not be considered an incentive. Incentives are those policies and/or action items taken by a community/state to lower start up costs and operational expenses when and where allowed by law in an effort to strengthen a company's competitiveness.

It can be argued that the State of Mississippi invented modern day economic development incentives in the 1930's during Governor Hugh White's "Balance Agriculture with Industry" campaign. While factors for relocations and expansions have changed, the State of Mississippi and Lauderdale County remain committed to creatively finding the right mix of available incentives to support business growth. Many factors are considered in developing the right mix of incentives. The type of assistance required, the number of jobs created, the amount of money invested in land, buildings and equipment as well as the SIC/NAICS classification may play a role.

Governments are limited in what they can accomplish on private property. However, some incentives may revolve around the extension of public infrastructure like water and sewer lines, access roads and in some cases rail spurs.

The EMBDC is prepared to assist you in identifying and making application for any and all incentives. Because each business is unique we encourage you to allow us, in conjunction with the Mississippi Development Authority, to more accurately calculate potential savings. Therefore, the information below should be used as a guide and not necessarily as an incentive calculator.

Before delving into incentive programs it is important to understand how the State of Mississippi taxes business and industry.

Taxes

All businesses in Mississippi are subject to state taxes. These taxes fall into four basic tax types:

  • Corporate Income Tax
  • Corporate Franchise Tax
  • Sales and Use Tax
  • Property Tax

Actual state tax requirements vary widely depending upon corporate structure and activities, but the following information is provided as a broad guideline to identify existing tax levies along with possible incentives available to reduce tax liabilities. All tax incentives and credits are subject to approval by the Mississippi State Tax Commission.

Corporate Income Tax

In Mississippi, corporate income is subject to a state income tax. This tax is levied in §27-7-5 of the Mississippi Code. Unless a company is taxable in another state, this tax is based on the company's net taxable income.

Mississippi Corporate Income Tax Information

Corporate Franchise Tax

Most corporations engaged in business in Mississippi are subject to franchise tax, as levied in §27-13-5 and §27-13-7 of the Mississippi Code. Franchise tax is a tax that is assessed on the company's capital value.

Mississippi Corporate Franchise Tax Information

Sales and Use Tax

All tangible personal property sold within the state is considered taxable unless specifically exempted or assigned a reduced rate by state law, as defined in §27-65-17 of the Mississippi Code. Similarly, companies doing business in Mississippi that bring tangible personal property into Mississippi are required to pay use tax on that property.

Mississippi Sales and Use Tax Information

Property Tax

Counties and municipalities levy a property tax on real and tangible personal property in Mississippi. Generally, property is assessed at 15% of true value. This assessed value is then multiplied by the millage rate to determine the annual tax liability. Each city and/or county sets its tax rate, or millage. Mississippi does not have a state property tax.

Mississippi Property Tax Information

Other Incentives

Advantage Jobs Incentive Program (§57-62-1 et seq)

The Advantage Jobs Incentive Program provides for a rebate of a percentage of Mississippi payroll to qualified employers for a period of up to 10 years.  This incentive is available to businesses that promise significant economic development of the economy through the creation of jobs.  The average of all jobs included in the program must meet the minimum average wage requirements.

The following businesses may qualify for this tax rebate:

  • Data or information processing enterprises that provide an average annual wage of 100% of the lesser of the average county or state wage.  In Tier I and II counties, 200 new jobs must be created, with 100 new jobs required in Tier III.
  • Manufacturers or distributors that provide an average annual wage of 110% of the lesser of the average county or state wage.  Additionally, the business must invest at least $20,000,000 in property, plant, and equipment.  In Tier I and II counties, 50 new jobs must be created, with 20 new jobs required in Tier III.
  • Any business except retailers and gaming establishments that provides an average annual wage of 125% of the lesser of the average county or state wage.  In Tier I and II counties, 25 new jobs must be created, with 10 new jobs required in Tier III.
  • Research and development enterprises that provide an average annual wage of 150% of the lesser of the average county or state wage.  10 new jobs must be created.
  • Technology intensive enterprises that provide an average annual wage of 150% of the state wage.  10 new jobs must be created.

In addition to meeting the above requirements, eligible businesses must also:

  • Provide a basic health benefits plan.
  • Execute a performance agreement with MDA specifying the manner in which the enterprise will utilize the rebate.

The amount available for rebate is the lesser of:

  1. The qualified Mississippi personal income tax withheld;
  2. A cost/benefit analysis prepared by MDA (the net benefit rate and the cumulative estimated net direct state benefit); or
  3. A legal maximum of 4% of applicable wages

Once the amount available is determined, it is multiplied by:

  • 90% if the annual average wage is at least 175% of the lesser of the average county or state wage;
  • 80% if the annual average wage is at least 125% but less than 175% of the lesser of the average county or state wage; or
  • 70% if the annual average wage is less than 125% of the lesser of the average county or state wage.

The company will have 24 months from the date of the Certificate to meet all program requirements, including jobs and salaries.

Other Taxes

Withholding of Personal Income Tax

Mississippi levies a tax on individual income in the state, as required in §27-7-5 of the Mississippi Code. Income tax is assessed at the same rate for individuals as it is for business entities. Employers are statutorily required to withhold Mississippi personal income tax from its employees and remit these withholdings directly to the Mississippi State Tax Commission. This tax is a deduction from the employee's wages, and does not require a contribution from the employer. Specific registration, withholding, and filing requirements can be obtained from the Mississippi State Tax Commission.

State Unemployment Compensation Tax

Mississippi levies an unemployment compensation tax on the first $7,000 of an employee's annual wages, as provided for in Mississippi Code §71-5-1 et seq. The maximum contribution rate for employers is 5.4%, with the minimum rate equaling 0.9%. Both the state minimum rate and the business's rate vary from year to year. New employers in the state are assigned an initial rate of 2.7% of wages until the Mississippi Department of Employment Security can compute an actual experience rate for the employer. Rates are recalculated each October and apply to the following year's wages. Rates are adjusted after two to three years of Mississippi filings, depending upon what time of year the employer begins reporting.

Worker's Compensation

Mississippi employers with five or more employees are required to purchase worker's compensation coverage through an insurance carrier, or they must qualify with the Mississippi Worker's Compensation Commission as a self-insurer.

The compensation is about two-thirds of the claimant's average weekly wages for up to 450 weeks, not including medical payments. These amounts are indexed on an annual basis.

Additional Information

For additional information on these incentives, along with specific requirements related to applying for the incentives, visit the Mississippi State Tax Commission's website at www.mstc.state.ms.us, and select Tax Incentives from the Reference column.

*The company must meet minimum criteria set forth by state statute and the rules and regulations of the Mississippi Development Authority, Mississippi Business Finance Corporation, Mississippi State Tax Commission, and local governing authorities to receive these credits/exemptions/incentives.

Mississippi Average Annual Salaries for Calendar Year 2006

County Average Annual Salary 110% of Average Annual Salary 125% of Average Annual Salary 150% of Average Annual Salary 175% of Average Annual Salary 200% of Average Annual Salary
State Average $30,601.00 $33,661.10 $38,251.25 $45,901.50 $53,551.75 $30,601.00
Lauderdale $29,072.00 $31,979.20 $36,340.00 $43,608.00 $50,876.00 $29,072.00
Notes:

***The company must meet minimum criteria set forth by state statute and the rules and regulations of the Mississippi Development Authority, Mississippi Business Finance Corporation, Mississippi State Tax Commission, and local governing authorities to receive these credits/exemptions/incentives.