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Tax Incentives Available to Data and Information Processing Centers in Mississippi

 

In order to attract and keep industry in Mississippi, the state offers a variety of incentives.  This document explains the more commonly used tax incentives that are currently available to data and information processing centers in the state.

INCOME TAX

 

In Mississippi, corporate income is taxed at 5%.  Unless a company’s income is taxable in another state, this tax is based on the company’s net taxable income. For multi-state service providers, income is apportioned based on a ratio of sales in Mississippi versus sales for the total entity.

 

Incentive

Description

Jobs Tax Credit

Jobs tax credits are taken against Mississippi corporate income tax.  This credit is calculated as a percentage of eligible payroll each year for five years, based on job location and salary paid.  The credits are taken in years two through six after the new jobs are created. 

 

To be eligible for this credit the employer must create and maintain an annual average employment of the minimum number of jobs required based on location.  Unused jobs tax credits can be carried forward up to five years.

 

County Classification            Jobs            ____Credit___

         

Tier III                        10 or more           10% of Payroll

Tier II                         15 or more           5% of Payroll

Tier I                           20 or more                   2.5% of Payroll

 

Rural Economic Development (RED) Tax Credit

Rural Economic Development (RED) credits are taken against Mississippi corporate income tax and can be used with the jobs tax credits.  RED credits are used in conjunction with industrial revenue bonds issued by the Mississippi Business Finance Corporation (MBFC).  The credits are based on the amount of bond-related debt service and can be used to offset up to 80% of the state corporate income tax liability each year for the life of the bonds.  Unused RED credits may be carried forward for three years.

 

Minimum requirements for these credits are:

·         $2,000,000 capital investment and 50 new full-time jobs; or

·         $5,000,000 capital investment and 20 new full-time jobs.

 

Growth and Prosperity (GAP) Incentive

A GAP designation may be awarded to eligible businesses in specific geographic areas of the State that exempts the business from income tax for up to ten years.  See details of this incentive under “Other Incentives.”

 

 

Note:  Jobs tax credits are limited to 50% of the annual Mississippi corporate income tax liability.  This credit is in addition to the RED tax credits allowed, which are limited to 80% of corporate income tax liability annually. The sum of the two credits can reach 100% of the Mississippi corporate income tax liability for a given year.  Unused credits may be carried forward as specified by the credit. 

CORPORATE FRANCHISE TAX

 

Most corporations engaged in business in Mississippi are subject to franchise tax.  Franchise tax is a tax that is assessed on the company’s capital value.  The capital value for the corporation is calculated based on:

 

 

For multi-state corporations, capital is pro-rated based on the following formula:

 

Book value of MS real and tangible personal property + MS Gross Receipts


Book value of total real and tangible personal property + total Gross Receipts

 

This ratio is then applied to the corporation’s total capital value to calculate the amount of capital to be apportioned to Mississippi.  The apportioned capital is then multiplied by the franchise tax rate to determine the Mississippi franchise tax liability.  This franchise tax rate is $2.50 per $1,000 of Mississippi capital.

 

FRANCHISE TAX INCENTIVES FOR DISTRIBUTORS

Incentive

Description

Growth and Prosperity (GAP) Incentive

A GAP designation may be awarded to eligible businesses in specific geographic areas of the State that exempts the business from franchise tax for up to ten years.  See details of this incentive under “Other Incentives.”

 

SALES & USE TAX

 

All tangible personal property sold within the state is considered taxable at 7% unless specifically exempted by state law.  Similarly, companies doing business in Mississippi that bring tangible personal property into Mississippi are required to pay use tax on that property.

 

For commercial construction of real property, there is a 3.5% contractor’s tax assessed on gross receipts of the project.  There are no exemptions to this tax, but if component building materials are purchased by, billed to, and paid for directly by the eligible entity, incentives may apply to these purchases.

 

Incentive

Description

Sales and Use Tax Exemption for Construction or Expansion

The sales and use tax exemption for construction and expansion is allowed on eligible machinery and equipment purchases and/or leases related to a new or expanded facility.  These purchases are subject to a one-half or full exemption, depending upon construction location.  This exemption is available from the beginning of construction or expansion up until three months after initial start up.  The exemption amount allowed is listed below:

                            

County Classification                    Exemption Amount     

Tier III (less developed)                                   100%

Tier II (moderately developed)                             50%

Tier I (more developed)                                      50%

 

Contractor’s tax – a one-half or full exemption of sales and use tax is available on component building materials used in construction, provided that the materials are sold to, billed to, and paid for by the eligible company.  The labor portion of the contract cannot be exempted and is subject to the 3.5% contractor’s tax.

 

This exemption applies to retail rate taxes, but does not cover tagged vehicles, ongoing expenses, or supply items.

 

Sales and Use Tax Exemption for Industrial Revenue Bonds

Any eligible purchases made with industrial revenue bonds issued by the Mississippi Business Finance Corporation (MBFC) can be exempted from the sales/use tax in Mississippi. 

 

Contractor’s tax – any component building materials purchased directly by the eligible company (using industrial revenue bonds issued by MBFC) are not subject to the contractor’s tax and can be exempted from sales/use tax.  The labor portion of the contract cannot be exempted and is subject to the 3.5% contractor’s tax.

 

Growth and Prosperity (GAP) Incentive

A GAP designation may be awarded to eligible businesses in specific geographic areas of the State that exempts the initial construction from sales and use taxes.  See details of this incentive under “Other Incentives.”

 

 

Property Tax

 

Counties and municipalities levy a property tax on real and tangible personal property in Mississippi.  Generally, property is assessed at 15% of true value.  This assessed value is then multiplied by the millage rate to determine the annual tax liability. Each city and/or county sets its tax rate, or millage.  Mississippi does not have a state property tax.

 

Incentive

Description

10-year Property Tax Exemptions

An exemption from property taxes on land, building, and equipment is available and is valid for up to 10 years.  The related municipal authorities and/or the local board of supervisors must approve this incentive.  The exemption may be granted on all property taxes except school taxes.

 

Industrial Revenue Bond Exemptions

An exemption from property taxes on land, building, and equipment is available and is valid for up to 10 years on property purchased with industrial revenue bond proceeds from bonds issued by the Mississippi Business Finance Corporation (MBFC).  The related municipal authorities and/or the local board of supervisors must approve this incentive.  The exemption may be granted on all property taxes except school taxes.

 

Growth and Prosperity (GAP) Incentive

A GAP designation may be awarded to eligible businesses in specific geographic areas of the State that exempts the business from certain property taxes for up to ten years.  See details of this incentive under “Other Incentives.”

 

 

Other Incentives

 

Incentive

Description

Advantage Jobs Incentive Program

The Advantage Jobs Incentive Program provides for a rebate of a percentage of Mississippi payroll to qualified employers for a period of up to 10 years.  This incentive is available to businesses that promise significant economic development of the economy through the creation of jobs.  The average of all jobs included in the program must meet the minimum average wage requirements.

 

The following businesses may qualify for this tax rebate:

  • Data or information processing enterprises that provide an average annual wage of 100% of the lesser of the average annual county or state wage.  In Tier I and II counties, 200 new full-time jobs must be created, with 100 new full-time jobs required in Tier III; or
  • Any business except retailers and gaming establishments that provides an average annual wage of 125% of the lesser of the average annual county or state wage.  In Tier I and II counties, 25 new full-time jobs must be created, with 10 new full-time jobs required in Tier III.

 

In addition to meeting the above requirements, eligible businesses must also:

  • Meet employment requirements within 24 months of their approval date.
  • Provide a basic health benefits plan.
  • Execute a performance agreement with MDA specifying the manner in which the enterprise will utilize the rebate.

 

The amount available for rebate is the lesser of:

  1. The qualified Mississippi personal income tax withheld;
  2. A cost/benefit analysis prepared by MDA (the net benefit rate and the cumulative estimated net direct state benefit); or
  3. A legal maximum of 4% of applicable wages.

 

Once the amount available is determined, it is multiplied by:

  • 90% if the annual average wage is at least 175% of the lesser of the average county or state wage;
  • 80% if the annual average wage is at least 125% but less than 175% of the lesser of the average county or state wage; or
  • 70% if the annual average wage is less than 125% of the lesser of the average county or state wage.

 

The company will have 24 months from the date of the Certificate to meet all program requirements, including jobs and salaries.

 

Growth and Prosperity (GAP)

The Growth and Prosperity Program designates specific counties as GAP counties and provides incentives to companies that locate or expand in these areas of the state. Companies that are approved for GAP will be exempt for a period of ten years or until December 31, 2015, whichever occurs first. 

 

Taxes that are included in this full exemption are:

 

·         Sales and use taxes on all equipment and machinery purchased during the initial construction or expansion at an approved facility.  This exemption is valid from the date that the project begins until three months after start-up.  This exemption does not cover tagged vehicles, ongoing expenses, supply items, or the contractors tax. 

 

Contractor’s tax – any component building materials purchased directly by the eligible company and used at the approved location are not subject to the contractor’s tax and can be exempted from sales/use tax.  The labor portion of the contract cannot be exempted and is subject to the 3.5% contractor’s tax.

 

·         All state income and franchise taxes related to the new location or expansion.  In instances where an expansion is approved for companies already subject to Mississippi income and franchise tax, an apportionment formula will be used to determine the percentage of Mississippi income and/or capital that is exempt through GAP.  This formula utilizes a property factor and a double weighted payroll factor based on GAP property and payroll divided by the total company property and payroll.  Specific calculation guidelines can be obtained from the Mississippi State Tax Commission.

 

·         Property taxes levied on land, building, equipment and certain inventory at an approved facility in an approved GAP designated area.  This exemption does not include school taxes and that portion of the property tax utilized to pay for fire and police protection. 

 

Eligible counties are:

 

Tunica, Coahoma, Quitman, Tallahatchie, Bolivar, Sunflower, Leflore, Washington, Humphreys, Holmes, Sharkey, Yazoo, Claiborne, Jefferson, Wilkinson, Walthall, Jefferson Davis, Choctaw, Noxubee, Webster, and Clarke

 

Counties with Eligible districts are:

 

Yalobusha – District 4, Lowndes – District 4, Attala – District 4, Franklin – Districts 1 and 2, Adams – District 4, Amite – Districts 2 and 3, and Winston – District 4.

 

 


 

Mississippi Average Annual Salaries for Calendar Year 2004

 

County

Average Annual Salary

110% of Average Annual Salary

125% of Average Annual Salary

150% of Average Annual Salary

175% of Average Annual Salary

 

 

 

 

 

 

State Average

$28,004.00

$30,804.40

$35,005.00

$42,006.00

$49,007.00

 

 

 

 

 

 

Adams

$24,569.00

$27,025.90

$30,711.25

$36,853.50

$42,995.75

Alcorn

$27,011.00

$29,712.10

$33,763.75

$40,516.50

$47,269.25

Amite

$23,063.00

$25,369.30

$28,828.75

$34,594.50

$40,360.25

Attala

$22,339.00

$24,572.90

$27,923.75

$33,508.50

$39,093.25

Benton

$25,147.00

$27,661.70

$31,433.75

$37,720.50

$44,007.25

Bolivar

$25,183.00

$27,701.30

$31,478.75

$37,774.50

$44,070.25

Calhoun

$22,242.00

$24,466.20

$27,802.50

$33,363.00

$38,923.50

Carroll

$21,162.00

$23,278.20

$26,452.50

$31,743.00

$37,033.50

Chickasaw

$24,730.00

$27,203.00

$30,912.50

$37,095.00

$43,277.50

Choctaw

$28,240.00

$31,064.00

$35,300.00

$42,360.00

$49,420.00

Claiborne

$42,474.00

$46,721.40

$53,092.50

$63,711.00

$74,329.50

Clarke

$22,490.00

$24,739.00

$28,112.50

$33,735.00

$39,357.50

Clay

$27,274.00

$30,001.40

$34,092.50

$40,911.00

$47,729.50

Coahoma

$25,984.00

$28,582.40

$32,480.00

$38,976.00

$45,472.00

Copiah

$23,954.00

$26,349.40

$29,942.50

$35,931.00

$41,919.50

Covington

$21,944.00

$24,138.40

$27,430.00

$32,916.00

$38,402.00

Desoto

$27,347.00

$30,081.70

$34,183.75

$41,020.50

$47,857.25

Forrest

$28,906.00

$31,796.60

$36,132.50

$43,359.00

$50,585.50

Franklin

$25,285.00

$27,813.50

$31,606.25

$37,927.50

$44,248.75

George

$23,287.00

$25,615.70

$29,108.75

$34,930.50

$40,752.25

Greene

$22,947.00

$25,241.70

$28,683.75

$34,420.50

$40,157.25

Grenada

$26,723.00

$29,395.30

$33,403.75

$40,084.50

$46,765.25

Hancock

$31,405.00

$34,545.50

$39,256.25

$47,107.50

$54,958.75

Harrison

$26,506.00

$29,156.60

$33,132.50

$39,759.00

$46,385.50

Hinds

$33,579.00

$36,936.90

$41,973.75

$50,368.50

$58,763.25

Holmes

$23,504.00

$25,854.40

$29,380.00

$35,256.00

$41,132.00

Humphreys

$19,345.00

$21,279.50

$24,181.25

$29,017.50

$33,853.75

Issaquena

$20,480.00

$22,528.00

$25,600.00

$30,720.00

$35,840.00

Ittawamba

$24,860.00

$27,346.00

$31,075.00

$37,290.00

$43,505.00

Jackson

$32,750.00

$36,025.00

$40,937.50

$49,125.00

$57,312.50

Jasper

$25,241.00

$27,765.10

$31,551.25

$37,861.50

$44,171.75

Jefferson

$22,124.00

$24,336.40

$27,655.00

$33,186.00

$38,717.00

Jefferson Davis

$22,035.00

$24,238.50

$27,543.75

$33,052.50

$38,561.25

Jones

$27,454.00

$30,199.40

$34,317.50

$41,181.00

$48,044.50

Kemper

$21,055.00

$23,160.50

$26,318.75

$31,582.50

$36,846.25

Lafayette

$28,083.00

$30,891.30

$35,103.75

$42,124.50

$49,145.25

Lamar

$23,752.00

$26,127.20

$29,690.00

$35,628.00

$41,566.00

Lauderdale

$27,571.00

$30,328.10

$34,463.75

$41,356.50

$48,249.25

Lawrence

$33,749.00

$37,123.90

$42,186.25

$50,623.50

$59,060.75

Leake

$20,596.00

$22,655.60

$25,745.00

$30,894.00

$36,043.00

Lee

$31,456.00

$34,601.60

$39,320.00

$47,184.00

$55,048.00

Leflore

$25,428.00

$27,970.80

$31,785.00

$38,142.00

$44,499.00

Lincoln

$26,480.00

$29,128.00

$33,100.00

$39,720.00

$46,340.00

Lowndes

$27,811.00

$30,592.10

$34,763.75

$41,716.50

$48,669.25

Madison

$30,728.00

$33,800.80

$38,410.00

$46,092.00

$53,774.00

Marion

$23,037.00

$25,340.70

$28,796.25

$34,555.50

$40,314.75

Marshall

$24,807.00

$27,287.70

$31,008.75

$37,210.50

$43,412.25

Monroe

$28,209.00

$31,029.90

$35,261.25

$42,313.50

$49,365.75

Montgomery

$20,066.00

$22,072.60

$25,082.50

$30,099.00

$35,115.50

Neshoba

$25,579.00

$28,136.90

$31,973.75

$38,368.50

$44,763.25

Newton

$24,558.00

$27,013.80

$30,697.50

$36,837.00

$42,976.50

Noxubee

$22,680.00

$24,948.00

$28,350.00

$34,020.00

$39,690.00

Oktibbeha

$26,651.00

$29,316.10

$33,313.75

$39,976.50

$46,639.25

Panola

$24,959.00

$27,454.90

$31,198.75

$37,438.50

$43,678.25

Pearl River

$23,092.00

$25,401.20

$28,865.00

$34,638.00

$40,411.00

Perry

$32,883.00

$36,171.30

$41,103.75

$49,324.50

$57,545.25

Pike

$23,276.00

$25,603.60

$29,095.00

$34,914.00

$40,733.00

Pontotoc

$26,774.00

$29,451.40

$33,467.50

$40,161.00

$46,854.50

Prentiss

$24,529.00

$26,981.90

$30,661.25

$36,793.50

$42,925.75

Quitman

$21,937.00

$24,130.70

$27,421.25

$32,905.50

$38,389.75

Rankin

$30,065.00

$33,071.50

$37,581.25

$45,097.50

$52,613.75

Scott

$23,268.00

$25,594.80

$29,085.00

$34,902.00

$40,719.00

Sharkey

$20,327.00

$22,359.70

$25,408.75

$30,490.50

$35,572.25

Simpson

$20,872.00

$22,959.20

$26,090.00

$31,308.00

$36,526.00

Smith

$27,516.00

$30,267.60

$34,395.00

$41,274.00

$48,153.00

Stone

$24,954.00

$27,449.40

$31,192.50

$37,431.00

$43,669.50

Sunflower

$22,316.00

$24,547.60

$27,895.00

$33,474.00

$39,053.00

Tallahatchie

$21,179.00

$23,296.90

$26,473.75

$31,768.50

$37,063.25

Tate

$24,263.00

$26,689.30

$30,328.75

$36,394.50

$42,460.25

Tippah

$25,678.00

$28,245.80

$32,097.50

$38,517.00

$44,936.50

Tishomingo

$24,386.00

$26,824.60

$30,482.50

$36,579.00

$42,675.50

Tunica

$26,030.00

$28,633.00

$32,537.50

$39,045.00

$45,552.50

Union

$25,388.00

$27,926.80

$31,735.00

$38,082.00

$44,429.00

Walthall

$21,123.00

$23,235.30

$26,403.75

$31,684.50

$36,965.25

Warren

$27,809.00

$30,589.90

$34,761.25

$41,713.50

$48,665.75

Washington

$25,172.00

$27,689.20

$31,465.00

$37,758.00

$44,051.00

Wayne

$24,221.00

$26,643.10

$30,276.25

$36,331.50

$42,386.75

Webster

$21,973.00

$24,170.30

$27,466.25

$32,959.50

$38,452.75

Wilkinson

$23,891.00

$26,280.10

$29,863.75

$35,836.50

$41,809.25

Winston

$28,536.00

$31,389.60

$35,670.00

$42,804.00

$49,938.00

Yalobusha

$27,707.00

$30,477.70

$34,633.75

$41,560.50

$48,487.25

Yazoo

$26,415.00

$29,056.50

$33,018.75

$39,622.50

$46,226.25

 


 

County Development Designation for 2006

 

The state’s 82 counties have been divided into three groups; Tier 1, which is comprised of the state’s most developed areas, Tier 2, which contains moderately developed counties, and Tier 3, which are the state’s least developed areas.

 

Tier Three

Less Developed

Tier Two

Moderately Developed

Tier One

More Developed

Jefferson

Monroe

Lowndes

Wilkinson

Copiah

Scott

Holmes

Pearl River

Alcorn

Claiborne

Amite

Calhoun

Noxubee

Bolivar

Grenada

Jefferson Davis

George

Leake

Benton

Humphreys

Tate

Quitman

Leflore

Union

Issaquena

Tishomingo

Simpson

Panola

Prentiss

Pontotoc

Sharkey

Wayne

Newton

Franklin

Adams

Lincoln

Tallahatchie

Stone

Itawamba

Choctaw

Clarke

Lauderdale

Sunflower

Hancock

Oktibbeha

Walthall

Jasper

Smith

Tunica

Pike

Hinds

Kemper

Harrison

Forrest

Webster

Montgomery

Lee

Greene

Coahoma

Warren

Chickasaw

Marion

Lamar

Perry

Covington

Neshoba

Marshall

Attala

Jones

Yazoo

Lawrence

Lafayette

Washington

Tippah

Rankin

Clay

Jackson

Madison

Winston

Carroll

Desoto

Yalobusha

 

 

 

 

Notes:

 

* County rankings and areas receiving a GAP designation may change.

 

**A business entity locating in a county that has received a GAP designation and also is a Tier 3 county may choose whether to use Tier 3 or GAP incentives.

 

***The company must meet minimum criteria set forth by state statute and the rules and regulations of the Mississippi Development Authority, Mississippi Business Finance Corporation, Mississippi State Tax Commission, and local governing authorities to receive these credits/exemptions/incentives.