What is the sales tax rate in Mississippi?
Mississippi imposes a statewide sales tax rate of 7% on the sale of tangible personal property, certain services, and rentals of tangible personal property. This tax is collected by the retailer at the point of sale and remitted to the state’s Department of Revenue. Unlike some other states, Mississippi does not allow local jurisdictions, such as cities and counties, to impose additional sales taxes. So, whether you’re in Jackson or Biloxi, the sales tax rate will be the same at 7%.
It is essential to be aware that some items are subject to different tax rates. For example, farm equipment and manufacturing machinery are taxed at a reduced rate of 1.5%. Alcoholic beverages are subject to an additional tax of 7%, making the total sales tax on these items 14%.
Mississippi also offers various sales tax exemptions for specific categories of goods or organizations. Nonprofit organizations, government entities, and educational institutions are generally exempt from paying sales tax on their purchases.
Sales Tax Mississippi: When should your business start collecting sales tax?
If you operate a business with a presence in Mississippi, you are required to collect sales tax on applicable sales. This presence, known as “nexus,” can be established through various means, including:
- Having a physical location in the state, such as an office, warehouse, or storefront
- Employing personnel in the state
- Regularly conducting business in the state, such as attending trade shows or making sales calls
Once you establish nexus in Mississippi, you must register for a sales tax permit and start collecting sales tax on all taxable sales. Keep in mind that even if you have a temporary presence in the state, such as attending a craft fair or convention, you may still be required to collect sales tax.
It’s important to note that even if your business is based outside of Mississippi, you may still need to collect sales tax on sales made to Mississippi customers if you meet the state’s economic nexus thresholds.
Mississippi Physical Sales Tax Nexus
Physical nexus in Mississippi is established when a business has a significant physical presence within the state, such as a brick-and-mortar store, office, or warehouse. This type of nexus also extends to businesses with employees, representatives, or agents operating within the state, even if the business itself is based elsewhere.
Sales Tax Physical Nexus checklist for Mississippi
To determine if your business has a physical nexus in Mississippi, consider the following factors:
- Do you have a physical location (store, office, warehouse) in the state?
- Do you employ personnel in Mississippi?
- Do you have representatives, agents, or salespeople operating in the state?
- Do you regularly conduct business in Mississippi (attending trade shows, making sales calls)?
- Do you have inventory stored in the state, even temporarily?
If you answered yes to any of these questions, your business likely has a physical nexus in Mississippi, and you must register for a sales tax permit, collect sales tax on applicable sales, and remit the tax to the state’s Department of Revenue.
Mississippi Economic Nexus Threshold: Revenue, Thresholds, and Transactions
Economic nexus in Mississippi is determined based on a business’s sales revenue or the number of transactions conducted in the state. As of the date of this writing, Mississippi enforces an economic nexus threshold of $250,000 in gross sales to customers in the state within a 12-month period.
Businesses that exceed this threshold must register for a Mississippi sales tax permit, collect sales tax on applicable sales to customers in the state, and remit the tax to the Mississippi Department of Revenue.
Exploring taxable services in Mississippi
Mississippi imposes sales tax on various services, while others are exempt. Understanding which services are taxable is essential for businesses operating in the state. Below is a list of some commonly taxable services in Mississippi:
- Amusement services (e.g., amusement park rides, concerts, theaters)
- Automobile repair and maintenance services
- Cable and satellite television services
- Cleaning services for commercial and industrial buildings
- Computer hardware and software services
- Construction services (only when materials are provided as part of the service)
- Fitness and health club memberships
- Hotel and lodging services
- Landscaping and lawn care services
- Laundry and dry-cleaning services
- Pest control services
- Security and alarm monitoring services
- Telecommunication services
Please note that this is not an exhaustive list, and the taxability of specific services may vary. Consulting with the Mississippi Department of Revenue for more detailed information on taxable services in Mississippi is the only way to truly stay compliant.
Mississippi Sales Tax on Products: How to Calculate What Your Business Should be Charging
Calculating sales tax on products in Mississippi is relatively straightforward, as the state has a uniform sales tax rate of 7%. To calculate the sales tax on a product, simply multiply the product’s price by 0.07. For example, for a product priced at $100, the sales tax would be $7 ($100 * 0.07), making the total cost $107.
Businesses should be aware that certain products are subject to different tax rates or exemptions. For instance, farm equipment and manufacturing machinery are taxed at a reduced rate of 1.5%. Additionally, certain items, such as prescription drugs, are exempt from sales tax.
When selling multiple items in a single transaction, calculate the sales tax on the total amount rather than on individual items.
How much is Mississippi clothing tax?
In Mississippi, clothing is subject to the standard sales tax rate of 7%. This includes most apparel items, such as shirts, pants, dresses, and shoes. However, specific clothing items may be exempt from sales tax, such as prescription eyewear and certain protective gear.
Do Mississippi sales tax holidays affect Mississippi clothing tax?
Mississippi holds a sales tax holiday each year, typically in late July or early August, during which specific items are exempt from sales tax. During this period, clothing and footwear priced under $100 per item are exempt from the state’s 7% sales tax. This holiday is designed to help families save on back-to-school shopping and includes most apparel items, excluding accessories like jewelry and handbags.
Businesses should be aware of the sales tax holiday dates and the eligible items to ensure they are correctly applying the sales tax exemption during the event.
Mississippi Online Sales Tax: Are SaaS and Digital Services Taxable?
In Mississippi, the sales tax applies to tangible personal property and certain services, including some digital goods and services. Specifically, digital products like audio, video, and e-books are subject to sales tax, regardless of whether they are accessed via streaming or download.
SaaS Sales Tax Mississippi: Does my Business Need to Charge Sales Tax for SaaS in Mississippi?
Mississippi has reversed its stance on SaaS taxability and no longer includes SaaS in it stax revenue stream. But it’s important for businesses to monitor any changes to the state’s tax laws and regulations. So if you provide SaaS or other digital services, Mississippi SaaS sales tax may not be a concern right now, but that might change as tax legislation is updated once again.
How can a business get a sales tax permit in Mississippi?
To get a sales tax permit in Mississippi, follow these steps:
- Visit the Mississippi Department of Revenue website.
- Complete the online registration process or download the paper application form.
- Provide all necessary business information, including the business type, ownership details, and estimated monthly sales.
- Submit the application and wait for approval.
- Once approved, you will receive your sales tax permit, which allows you to collect sales tax from customers.
Note that there is no fee to obtain a sales tax permit in Mississippi, but you must renew it annually.
Collecting Sales Tax in Mississippi as a Business
Businesses with a sales tax permit in Mississippi must collect the appropriate sales tax from customers on all taxable sales. This includes both in-state and out-of-state sales that meet the economic nexus thresholds. Ensure you are charging the correct sales tax rate, keeping accurate records of all transactions, and remitting the collected tax to the Mississippi Department of Revenue on time.
Mississippi Tax Return Due Dates Explained
In Mississippi, the frequency of sales tax returns is determined by the amount of tax collected. Businesses that collect less than $300 per month in sales tax can file quarterly, while those collecting more than $300 but less than $2,400 file monthly. Businesses that collect over $2,400 in sales tax must file semi-monthly.
Due dates land on the 20th of the month following the reporting period as follows:
- Monthly Returns must be filed on the 20th day of each month.
- Quarterly Returns are due on the following dates
- Quarter 1 (Jan – Mar): April 20
- Quarter 2 (Apr – Jun): July 20
- Quarter 3 (Jul – Sep): October 20
- Quarter 4 (Oct – Dec): January 20
- Annual Returns are due on January 20
What is the required frequency for sales tax returns in Mississippi?
The required frequency for sales tax returns in Mississippi is based on the amount of sales tax collected:
- Monthly: Businesses collecting between $300 and $2,400 per month.
- Quarterly: Businesses collecting less than $300 per month.
- Semi-Monthly: Businesses collecting over $2,400 per month.
Be sure to file your sales tax return by the designated due date for your filing frequency to avoid penalties.
