Taxes and Credits

Corporate Franchise Tax

Mississippi’s franchise tax applies to most corporations doing business in the State. The rate is $2.50 per $1,000 of the value of capital used, invested, or employed in the State. The tax base consists of capital stock issued and outstanding, surplus and undivided profits, and true reserves. However, the tax base cannot be less than the corporation’s assessed value of real and tangible personal property in Mississippi.

For multi-state corporations, capital is apportioned to Mississippi on a formula/ratio basis. The ratio is calculated by dividing the sum of the book value of real and tangible personal property owned in the State plus the gross receipts received from business activity in the State by the sum of the book value of real and tangible total corporate personal property plus total corporate gross receipts received. The ratio is then applied to the total capital stock, surplus and undivided profits, and true reserves to calculate the amount of capital apportioned to Mississippi. This amount is then multiplied by the franchise tax rate to obtain the amount of franchise tax owed.

The Mississippi Major Economic Impact Authority is authorized to negotiate a fee-in-lieu of franchise tax in an amount not less than $25,000 with the owners of a company if Major Economic Impact Act funds are utilized.

Example (Multi-State Operation)

Assume a company owns $2,400,000 (book value) of real and tangible personal property, $1,080,000 of which is located in Mississippi. The total capital stock, surplus and undivided profits, and true reserves of the company are $2,000,000. The corporation’s franchise tax is calculated below: