The Mississippi Legislature recently approved Senate Bill 2858 (SB 2858), the "Taxpayer Pay Raise Act of 2016," which would phase-out the Mississippi Franchise Tax and reduce the income tax rates for individuals, corporations, trusts and estates. SB 2858 was signed into law by Governor Phil Bryant on May 13, 2016.

SB 2858 phases out the Mississippi Franchise Tax over 10 years starting in 2018. Currently, the tax applies to corporations and is imposed at a rate of $2.50 for each $1,000 of the value of a corporation's capital used, invested or employed within Mississippi. In 2018, the franchise tax rate is reduced by $0.25 per year until it is eliminated for tax years after 2028. Provisions of SB 2858 also exempt, starting in 2018, the first $100,000 of the value of capital used, invested or employed in Mississippi from the franchise tax.

SB 2858 reduces the income tax rates applicable to individuals, corporations, trusts and estates. Under current law, the first $5,000 of taxable income is taxed at 3%, the next $5,000 of taxable income is taxed at 4% and all taxable income over $10,000 is taxed at 5%. SB 2858 would gradually reduce income tax rates between 2018 and 2022 to 0% on the first $5,000 of income, to 4% on income greater than $5,000 and up to $10,000, and to 5% on all income in excess of $10,000.

Mississippi law and regulations currently do not provide for a rate of withholding on supplemental wages.

The current Mississippi income tax withholding rates and employer instructions (last revised November 2013) are located here.

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