This month we travel to the land of Dixie, the southern state of Mississippi. The state is the 32nd largest and 34th most populous of the 50 states. 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 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 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 increased tourism: they include the Gulf Coast resort town of Bay St. Louis, Gulfport and Biloxi, and the Mississippi River towns of Tunica (the third largest gaming area in the U.S.), Greenville, Vicksburg and Natchez.
The state has some major automotive factories, such as the Toyota Mississippi Plant in Blue Springs and a Nissan Automotive Plant in Canton. The latter produces the Nissan Titan.
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
The top individual income tax rate is 5% and the top corporate income tax rate is also 5%.
Apportionment: Mississippi uses a single-sales factor apportionment formula. Please note that the state provides different apportionment formulas based on specific types of businesses. However, the single-sales factor is the default when no specific business formula is specified.
In Mississippi, receipts from services are sourced based on the place the services are performed.
Sales Tax Structure
The state sales tax rate is 7%. However, municipalities can also assess local taxes, so the combined rate may be as high as 8%.
Sellers who lack physical presence nexus in Mississippi but who purposefully or systematically exploit the Mississippi market have substantial economic presence in the state for use tax purposes if their sales into the state exceed $250,000 for the prior twelve months. Services are included in the threshold. This legislation went into effect on September 1, 2018.
A marketplace facilitator that has economic nexus with Mississippi must collect and remit sales tax on marketplace sales for delivery into the state. Marketplace facilitators should include all sales made through the platform when calculating the economic nexus threshold (more than $250,000 in sales of tangible personal property or taxable services in the state). The law exempts third-party food delivery and includes an election for marketplace sellers with more than $1 billion in national revenue (including sales of affiliates and franchised entities) to directly collect sales and use tax. This law went into effect on July 1, 2020.
Mississippi is aggressive in its approach to the taxation of technology products for sales tax purposes. Generally, digital products that are transferred electronically are subject to sales and use tax. Prewritten computer software that is electronically downloaded is taxable. Custom computer software that is electronically downloaded is also taxable. Lastly, SaaS is taxable. However, sales of computer software and services when transmitted by the internet to a destination outside of the state and the first use of the software or services is outside of the state are exempt from taxation. Furthermore, the use of computer software located on a server outside of the state of Mississippi, and accessible for use only via the internet, is not subject to tax. How products are produced, sold and delivered is critical to determining their tax status.
Many states have annual sales tax holidays, during which certain items the state wants to promote the purchase of (like school supplies, emergency preparedness supplies, or energy efficient appliances) can be purchased sales tax free. Mississippi had a sales tax holiday from July 31 to August 1, which comprised of clothing, footwear and school supplies. Personal property items, when purchased from a small business are part of another sales tax holiday coming up on November 28.
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. The Barq’s Root Beer company is now owned by Coca-Cola and is based in Atlanta.
- Elvis Presley was born in Tupelo on January 8, 1935.
- Jackson, the capital of Mississippi, is named after General Andrew Jackson in honor of his victory at the Battle of New Orleans of 1815.
- The state has about 27 tornadoes annually.
- The 26-mile section of the Mississippi Gulf Coast that stretches from Biloxi to Henderson Point is the world’s largest man-made beach.
- Legendary puppeteer Jim Hensen was born in Greenville and spent his childhood in Leland, Mississippi. The town still honors Henson’s Mississippi roots with the birthplace of the Kermit the Frog Museum and the Rainbow Connection Bridge.
- Pine Sol, the cleaning and deodorizing product, was developed in 1929 by chemist Harry A. Cole, who lived in a pine forest near Jackson, MS.
- Mark Twain had a literary love affair with the Mississippi River and wrote about it often. One of his most famous works centered around the river and places along its path is The Adventures of Huckleberry Finn.
