United States

Mississippi moves forward with sweeping tax reform

Enacts multiple tax phase outs


On May 13, 2016, Mississippi Gov. Phil Bryant signed Senate Bill 2858, providing sweeping tax reform aimed at creating a more business friendly environment in the state.

Significantly, Senate Bill 2858 phases out the franchise tax over a ten year period beginning for tax years on or after Jan. 1, 2018. The franchise tax, first levied in 1934, is a tax based on the value of the capital used, invested, or employed by taxable corporations doing business in the state. The tax remains at the current rate of $2.50 per $1,000 of subject capital for tax years beginning on or after Jan. 1, 2018. The phase out continues over the next ten years as follows:

Tax years beginning after:   

Amount per $1,000 of
subject capital

Jan. 1, 2019 $2.25
Jan. 1, 2020 $2.00
Jan. 1, 2021 $1.75
Jan. 1, 2022 $1.50
Jan. 1, 2023 $1.25
Jan. 1, 2024 $1.00
Jan. 1, 2025 $0.75
Jan. 1, 2026 $0.50
Jan. 1, 2027 $0.25
Jan. 1, 2028 Complete phase-out 


Additionally, the bill enacts an exemption on the first $100,000 of capital value for tax years beginning after Jan. 1, 2018.

Senate Bill 2858 also phases in a personal income tax exemption on the first $5,000 of taxable income. Through 2017, the personal income tax rate remains at three percent on the first $5,000, phasing out completely by 2022. Additionally, a new exemption for self-employed individuals permits a deduction from gross income of 17 percent of the federal self-employment taxes imposed on those individuals for taxable years ending in calendar year 2017; 34 percent for taxable years ending in 2018; and 50 percent for taxable years ending in 2019 and after.

The franchise tax, a target of frequent criticsm in recent years, exceeded $260 million in collections in the 2015 fiscal year. It is expected that Senate Bill 2858 will create tax reductions of over $400 million through the next 12 years.


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