Complete Guide to Mississippi LLC Taxes in 2025-2026
Mississippi has undergone significant tax reform in recent years, transitioning from a three-bracket graduated income tax system to a flat rate. Starting in 2026, Mississippi will impose a flat 4.70% income tax rate on all taxable income, making it one of the simpler states for LLC tax planning. Combined with a modest $25 annual report fee and a unique franchise tax, the Magnolia State offers a relatively affordable environment for LLC owners. This guide covers everything you need to know about Mississippi LLC taxes.
How Mississippi Taxes LLCs
Mississippi treats LLCs as pass-through entities for state tax purposes. The LLC itself does not pay Mississippi income tax. Instead, profits pass through to individual members who report their share on their personal Mississippi income tax returns (Form 80-105).
For a single-member LLC, income flows to Schedule C of the federal return and then to Mississippi Form 80-105. For a multi-member LLC, the LLC files Mississippi Form 84-105 (Partnership Return) as an informational return, and each member receives a Schedule K-1.
However, Mississippi does impose a franchise tax on LLCs. This is an entity-level tax calculated at $2.50 per $1,000 of capital employed in Mississippi, with a minimum of $25. This applies regardless of profitability, making it an important cost consideration for capital-intensive businesses.
Key Point: Mississippi is transitioning to a flat 4.70% income tax rate effective 2026. For 2025, the rate is 4.70% on income over $10,000 (with the first $10,000 exempt). The franchise tax of $2.50 per $1,000 of capital is an additional cost that many LLC owners overlook. The minimum franchise tax is $25.
Mississippi Income Tax Rate Schedule
| Tax Component | Rate | Notes |
|---|---|---|
| Income Tax (2026+) | 4.70% flat | On all taxable income |
| Franchise Tax | $2.50 per $1,000 | Based on capital in Mississippi |
| Minimum Franchise Tax | $25 | Floor for all LLCs |
| Sales Tax | 7.00% | One of the highest state rates |
Mississippi LLC Annual Filing Requirements
- Annual Report: $25 fee, due April 15 each year, filed with the Secretary of State
- Franchise Tax Return: Filed annually with the Department of Revenue
- State Tax Returns: Form 80-105 (individual) or Form 84-105 (partnership)
- Estimated Tax Payments: Required if expecting to owe $200 or more
- Sales Tax: File with the Department of Revenue on assigned schedule
Cost Note: The $25 annual report fee is among the lowest in the country. However, the franchise tax adds an additional layer of cost, particularly for LLCs with significant capital. An LLC with $100,000 in capital would owe $250 in franchise tax annually, plus the $25 annual report fee.
Mississippi Franchise Tax Explained
The Mississippi franchise tax is an entity-level tax that applies to all LLCs doing business in the state, regardless of profitability. Key details:
- Rate: $2.50 per $1,000 of capital employed in Mississippi
- Minimum: $25 (even if the LLC has minimal capital)
- Capital base: Includes invested capital, surplus, and undivided profits attributable to Mississippi
- Due date: Filed with the annual income tax return (March 15 for partnerships, April 15 for individuals)
- Planning tip: Managing the capital structure of your LLC can minimize franchise tax exposure
Mississippi Sales Tax for LLCs
Mississippi imposes a 7.00% state sales tax -- one of the highest state sales tax rates in the country. Key points:
- State rate: 7.00% on most goods and services
- No local additions: The 7% rate is uniform statewide
- Manufacturing: Raw materials and machinery used in manufacturing may qualify for reduced rates
- Services: Mississippi taxes most services, unlike many states
- Food: Grocery food is taxable at the full 7% rate (no exemption)
Mississippi LLC vs. Other States
| State | Income Tax | Annual Fee | Key Feature |
|---|---|---|---|
| Mississippi | 4.70% flat | $25 + franchise tax | Franchise tax on capital |
| Alabama | 2-5% | $100 minimum + BPT | Business privilege tax |
| Tennessee | 0% | $300 minimum | No income tax, franchise/excise tax |
| Louisiana | 1.85-4.25% | $35 | Graduated brackets |
| Arkansas | 2-4.4% | $150 | Graduated, higher annual fee |
Mississippi Estimated Tax Schedule
- Q1: April 15, 2025
- Q2: June 15, 2025
- Q3: September 15, 2025
- Q4: January 15, 2026
Mississippi LLC Formation Costs
- Certificate of Formation: $50 with the Secretary of State
- Registered Agent: Required; member or professional service ($50-200/year)
- EIN: Free from the IRS
- Annual Report: $25/year
- Franchise Tax: Minimum $25/year
Tax Deductions for Mississippi LLC Owners
- Standard deduction: $2,300 single, $4,600 MFJ
- Personal exemption: $6,000 single, $12,000 MFJ
- Half of SE tax: Deductible on Mississippi return
- Health insurance premiums: Self-employed deduction available
- Retirement contributions: SEP-IRA, solo 401(k) deductible
Common Mississippi LLC Tax Mistakes
- Forgetting the franchise tax: It is separate from the income tax and due annually regardless of profit
- Ignoring the transition to flat rate: The 2026 flat rate simplifies planning but check current-year rules
- Not registering for sales tax: Mississippi's 7% rate applies to most goods AND services
- Missing the $200 estimated payment threshold: Lower than most states
- Overlooking grocery taxation: Unlike many states, Mississippi taxes food at the full rate
Mississippi Resources
- Mississippi Department of Revenue: dor.ms.gov -- tax forms, payments, guidance
- Secretary of State: sos.ms.gov -- business filings, annual reports
- Revenue Customer Service: (601) 923-7700