Mississippi bill phases out franchise tax, reduces income taxes

Mississippi Gov. Phil Bryant has signed legislation reducing income taxes for corporate and personal taxpayers, creating a deduction for self-employed individuals, and phasing out the franchise tax. The law phases out the income tax on the first $5,000 of taxable income by exempting the first $1,000 in 2018 and then increasing that amount by $1,000 per year until 2022 when there will be no tax on the first $5,000. The rate on income between $5,000 and $10,000 remains 4%. For income in excess of $10,000 the rate remains 5%.

Further, a deduction is enacted for self-employed individuals equal to 17% of the federal self-employment taxes in 2017, increasing to 34% in 2018, and 50% in 2019 and thereafter.

Finally, the franchise tax will be phased out between 2019 and 2027 by decreasing the current tax of $2.50 for each $1,000 of the value of the capital used, invested, or employed in the state by $0.25 per year and then repealing the tax entirely in 2028. Also, there is now an exemption from franchise tax for the first $100,000 of the value of capital used, invested or employed beginning in 2018. (S.B. 2858, Laws 2016, approved May 13, 2016, and effective January 1, 2016.)

Visit our News Library to read more news stories.