On May 13, 2016, Mississippi Governor Phil Bryant (R) signed into law S.B. 2858, which enacts a phase-out of the Corporation Franchise Tax via a gradual rate reduction starting with taxable years beginning in 2019 and ending with taxable years beginning in 2027. S.B. 2858 also implements a $100,000 minimum taxable capital threshold starting with taxable years beginning on or after January 1, 2018.
Franchise Tax Phase-Out
The current Corporation Franchise Tax rate is $2.50 for each $1,000 of taxable capital. Under S.B. 2858, the Corporation Franchise Tax rate is scheduled to phase-out as follows:
Minimum Taxable Capital Requirement
Starting with taxable years beginning on or after January 1, 2018, Mississippi will impose the Corporation Franchise Tax only on taxable capital in excess of $100,000. The $25 minimum tax applies, regardless.
This article originally appeared in BDO USA, LLP’s State and Local Tax Alert – May 2016. Copyright © 2016 BDO USA, LLP. All rights reserved. www.bdo.com.