If you live in the Magnolia State or have employees who work there, you’ll need to know about the state’s payroll taxes. Luckily for you, there are only two to worry about:
- Income Tax
- Unemployment Insurance Tax
Remember, these don’t include federal income taxes. They’re just the Mississippi state payroll taxes that all employers must withhold (income tax) or pay (unemployment tax).
So what is Mississippi’s income tax rate? And how much do employers need to pay in state unemployment insurance (SUI) taxes?
Let’s take a look.
Mississippi State Income Tax
In Mississippi, any resident or person who makes money in the state must pay a flat tax of 5% on taxable income that exceeds $10,000. The rate will gradually go down until it hits 4% in 2026.
Upon hiring an employee for the first time, you’ll give them a Mississippi Form 89-350 to fill out. This form—the Mississippi Employee’s Withholding Exemption Certificate—tells you how much to withhold in state taxes.
Keep it on file for as long as the employee works for you or at least three years after they leave, as per state law.
Employees must fill out and give you Form 89-350. You’ll use this form, along with the Mississippi tax tables, to withhold the correct amount of taxes from each paycheck. You can find the tax tables on the state’s withholding FAQs page.
There’s a tax table for daily, weekly, bi-weekly, semi-monthly, and monthly payroll period schedules.
Each table shows you how much tax to withhold according to two things:
- Wage range
- Total exemption claimed on Form 89-350
We suggest keeping a copy of the tax table that matches your pay period handy. You can use it to double-check the withholding amount calculated by your payroll software. Or, if you’re trying to run payroll by hand, you’ll have it at the ready.
All withheld taxes and withholding returns are due on the 15th day of the month following the pay period. So if you pay employees on December 30, taxes and returns would be due January 15.
Mississippi Unemployment Insurance Tax
For first-time employers, the unemployment tax rate is low compared with other states. New employers only need to pay a rate of 1% on the taxable wage base of $14,000. Neighboring states like Tennessee and Alabama, on the other hand, charge 2.7% in SUI taxes for new employers.
Your unemployment insurance tax rate will go up slightly during your second year as an employer. Now, instead of paying 1%, you’ll pay 1.10% of the taxable wage base. In your third year, you’ll pay 1.20%.
Here’s what this would look like in practice: let’s say you’re a first-year employer at a flower shop in Mississippi. You have three employees: Tonya, Grace, and Jamal.
You pay them each an hourly wage that, for simplicity’s sake, amounts to $55,000 a year per person.
The taxable wage base is $14,000 per person. Multiply that number by three to get your total taxable wage base: $42,000.
One percent of $42,000 is $420.
That’s how much you’d pay in unemployment taxes as a first-year employer in the Magnolia State. Not too terrible, right?
After your third year, your SUI rate could be anywhere from 0.0% to 5.4%. It depends on a combination of factors, like how much is in your account and how much you’ve had to withdraw, among other variables.
If you’re not sure what rate to pay, contact your Mississippi Department of Employment Security tax field representative.
How to Submit Your Mississippi Payroll Taxes
When you’re a withholding employer in Mississippi, you’ll use the state’s Taxpayer Access Point (TAP) system to pay taxes.
First, you must register for a TAP account. Gather this information before you begin—you won’t be able to save your progress and finish the registration process later:
- Your Social Security Number (SSN) if you’re a sole proprietor
- Your Federal Employer Identification Number (FEIN) if your company is an LLC, partnership, or corporation
- A name, phone number, email address, and fax number for the department or person responsible for withholding and filing taxes
- The email address where you’d like to receive notifications from the Mississippi Department of Revenue
Once you set up your TAP account, you can quickly and easily file and pay those payroll taxes. Just make sure you stay on top of the state rules and deadlines.
For example, employers can be required to file electronically. If you absolutely can’t file online, you’ll need special permission to file and pay via snail mail.
If you fail to file in the format you’re supposed to, you’re slapped with a $25 fine—the first time. After that, it’s a steep $500 fine per transgression.
And if you file and pay late—or not at all—these are the penalties you’ll be hit with:
- 10% penalty on the tax due
- Interest that accumulates at 1% a month, until you pay
- If you forget to file an information return or furnish a required statement: $5.00 per statement, with a minimum of $250.00, and up to a maximum of $10,000.00 for each reporting account
- If you purposefully ignore the deadline for filing an information return or furnish a required statement: $25.00 per statement, with a minimum of $250.00, and up to a maximum $50,000.00 for each reporting account
Moral of the story? Pay your taxes and pay them on time, folks.
The Official Resources for Mississippi Payroll Taxes
When in doubt about a rule or regulation when it comes to Magnolia State payroll taxes, check out this list of state resources:
- Withholding Tax Info
- Individual Income Tax FAQs
- Mississippi DOR TAP Homepage
- Mississippi DOR Business Homepage
- Unemployment Tax
- Reporting and Filing: Managing the Details
- Employer Resources
- Employer FAQs
With this little list in your pocket, you’ll be able to answer just about any question you have about Mississippi payroll taxes.
The Easier Way to Submit Your Mississippi Payroll Taxes
It’s true that you can technically file your Mississippi payroll taxes manually. As long as you only have a couple of employees, that is.
And even then, you’ll find yourself spending an inordinate amount of time on payroll alone. You won’t really have much time left to do whatever it is you actually like doing in your role as an employer.
Plus, there’s all those terrifying fines. You could find yourself deep in a hole you can’t see your way out of if you miss even one filing deadline and don’t realize it.
It’s not worth saving money by doing taxes yourself. Instead, use a payroll software service. Services like Gusto, Paylocity, and Intuit Quickbooks can take care of your taxes for you. They automate many steps of the tax withholding process, making it so that you don’t even have to lift a finger.
And whatever they don’t automate, they send you reminders for.
The result?
You miss zero deadlines.
Yes, there’s a little bit of work upfront. You’ll need to provide the payroll software with information like what state you live in, how many employees you have, and what type of business you are. But after the initial setup, running payroll will be a breeze.
So will tax time. And recordkeeping. And creating and filing reports.
Oh, and they also handle your federal taxes for you. Remember, this guide you’re reading now is only about Mississippi’s state taxes. You have to make sure you nail both state and federal tax requirements each time you run payroll.
A good payroll software will keep everything organized, easy, and streamlined for you.
The best way to start off your journey as an employer is to research the best payroll software and test-drive the ones that look appealing. You’ll find the best match for you—and you’ll be glad you never tried to run payroll on your own.
