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.)
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