Taxes and Credits

Sales and Use Tax

Sales and use taxes are applied to all businesses having legal existence within the State. Although sales taxes vary, based upon the types of transactions, the following list details some of the more specific sales taxes relative to manufacturers.

Sales to a Manufacturer:

Raw materials (except sand and gravel, 5¢ /ton)	0%
Catalysts, chemicals, or gases used directly in processing (except natural gas, 1.5%)	0%
Packaging and containers for sale with finished goods	0%
Pollution control equipment (if qualified)	0%
Machinery and parts used directly in manufacturing and port operations (purchase or rental)*	1.5%
Industrial electricity, natural gas, and fuels	1.5%
Industrial water	7%
Telephone and telegraph	7%
All other equipment, furniture, fixtures, materials, supplies, and rentals not used directly in manufacturing	7%
Contract construction for projects over $10,000 (except residential)	3.5%

Sales by a Manufacturer:

To final consumer or user	7%
To another manufacturer for use as manufacturing machinery	1.5%
To another manufacturer as a raw material for further processing	0%
To a wholesaler or retailer for resale	0%
To exempt customers (e.g., government agencies, educational institutions, etc.)	0%

A use tax applies to personal property purchased in another state but utilized in Mississippi. The use tax is computed by applying the Mississippi sales tax rate applicable to that type of property less credit allowed for sales or use taxes paid in the state of purchase. Used property is generally taxed on the basis of its book value figured on straight-line depreciation.

EXEMPTIONS

In Tier III Counties**
A full sales and use tax exemption is available to qualified businesses (manufacturing and processing) on purchases of component building materials used in the construction or expansion of a building. A full sales and use tax exemption is also available on qualified purchases of new machinery and equipment.

In Tier II and Tier I Counties**
A sales and use tax exemption equal to one-half of the total tax liability is available to qualified businesses (manufacturing and processing) on purchases of component building materials to be used in the construction or expansion of a building. A sales and use tax exemption equal to one-half of the total tax liability is also available on qualified purchases of new machinery and equipment.

Bond Finance Program*

A full sales and use tax exemption is available to qualified businesses which finance component building materials and machinery and equipment with bond proceeds.

National or Regional Headquarters

A full sales and use tax exemption is available to qualified businesses of an industrial nature transferring national or regional headquarters to Mississippi or in-state existing businesses establishing national or regional headquarters and creating a minimum of 35 jobs. The exemption is available to qualified businesses on purchases of component materials used in the construction or expansion of buildings. A full sales and use tax exemption is also available on qualified purchases of new machinery and equipment.

*These credits can be used in any combination, but the total combination cannot exceed 50% of the taxpayer’s income tax liability for that year. Any excess credit may be carried forward for five successive years. 

**These exemptions do not apply to the 3.5% contractor’s tax.