Apr 25, 2016
From KPMG TaxWatch
Mississippi Senate Bill 2858, the “Taxpayer Pay Raise Act of 2016,” has been sent to Governor Bryant for signature. If signed, this bill would provide tax relief for Mississippi residents and businesses. Notably, the bill phases out Mississippi’s franchise tax over a period of several years. The franchise tax raises about $240 million annually and is imposed in addition to the corporate income tax. Currently, franchise tax is imposed on corporations at a rate of $ 2.50 for each $1,000 of the value of a corporation’s capital used, invested, or employed within Mississippi. For the tax year beginning on or after January 1, 2018 and before January 1, 2019, the $2.50 rate per $1,000 of capital remains the same, but the tax is imposed only on the value of capital used, invested, or employed in the state in excess of $100,000. For each of the nine tax years thereafter (i.e., from 2019 to 2027), the rate drops by 25 cents per $1,000 of capital each year and likewise applies only to the value of capital that exceeds $100,000. Thus, effective for tax years beginning on or after January 1, 2027, but before January 1, 2028, the tax is imposed at a rate of 25 cents per $1,000 of capital used, employed or invested in the state that exceeds $100,000. Effective January 1, 2028, the franchise tax is fully repealed.
The bill also reduces the income tax rates applicable to individuals, corporations, trusts and estates. Currently, the first $5,000 of taxable income is taxed at three percent, the next $5,000 of taxable income is taxed at four percent and a rate of five percent applies to all taxable income over $10,000. Senate Bill 2858 incrementally phases-out the three percent tax on the first $5,000 of income from calendar years 2018 through 2021. Please contact Sarah Catherine Sforzini at 404-979-2188 with questions.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.