Mississippi's Franchise Tax Is Almost Gone: What the 2026 Rate Cut Means for Your Corporation

If your corporation does business in Mississippi, you are paying a tax for the privilege of existing there — and this year, that bill gets cut by a third. For 2026, Mississippi's corporate franchise tax drops to just 50 cents per $1,000 of capital over $100,000, down from 75 cents last year. One more step down in 2027, and then the tax disappears entirely on January 1, 2028.

That sounds like free money, and mostly it is. But the phase-out has edges that still catch business owners: S corporations owe the tax at the entity level even though they pass income through to shareholders, every corporation must still file a return even if it owes only the $25 minimum, and your capital base can never be reported below the assessed value of your Mississippi property. Here is what the 2026 rate cut means for you, who still owes the tax, and how to handle the last two years of filings cleanly.

How the Phase-Out Works​

Mississippi has been winding down its franchise tax since 2018 under Senate Bill 2858, often called the Taxpayer Pay Raise Act. The original rate was $2.50 for every $1,000 of capital used, invested, or employed in the state. The law first exempted the initial $100,000 of capital, then shaved $0.25 off the rate each year.

Here is where the schedule stands now:

The 2026 cut is the second-to-last step. For tax years beginning on or after January 1, 2028, the franchise tax is fully repealed — no return, no minimum, nothing.

To put the savings in concrete terms: a corporation with $600,000 of Mississippi capital paid $375 for 2025 (($600,000 − $100,000) / $1,000 × $0.75). For 2026, the same capital base produces a $250 bill. In 2027 it falls to $125, and then it is gone. Larger capital bases see proportionally larger savings, while small corporations near the exemption line may already owe only the $25 minimum.

Who Still Owes the Tax in 2026​

The franchise tax applies to every corporation domesticated or qualified to do business in Mississippi, and that net is wider than many owners realize:

• C corporations owe franchise tax on their Mississippi capital base, filed together with the corporate income tax return.
• S corporations owe franchise tax at the entity level, even though their income passes through to shareholders. This surprises owners every year: electing S status shelters you from Mississippi corporate income tax, but it does not shelter you from the franchise tax until repeal.
• LLCs taxed as C corporations are treated as corporations and owe the tax.
• Out-of-state corporations qualified to do business in Mississippi owe tax on the capital employed in the state, not on their worldwide capital.

Who does not owe it? Sole proprietorships, general partnerships, and LLCs in their default tax classification (disregarded entity or partnership) are outside the franchise tax entirely. Tax-exempt corporate organizations file the corporate return but leave the franchise tax lines blank.

One critical point: owing little or nothing does not excuse you from filing. Every corporation domesticated or qualified in Mississippi must file a return even if its capital falls under the $100,000 exemption and it owes only the $25 minimum. Skipping the return because "the tax is basically gone" is how penalties happen.

How the Tax Is Calculated​

The franchise tax base is the value of your capital — broadly, capital stock, surplus, undivided profits, and true reserves — used, invested, or employed in Mississippi. Three mechanics matter most for 2026:

1. The $100,000 exemption​

The first $100,000 of Mississippi capital is exempt, and the rate applies only to the excess. A corporation with $90,000 of capital in the state owes just the $25 minimum. This exemption is what already took many small corporations down to minimum-tax status years ago.

2. The $25 minimum​

No matter how small your capital base, the computed tax cannot be less than $25 for the period. If your math produces $8, you pay $25.

3. The property-value floor​

Your determined capital in Mississippi cannot be less than the assessed value of your Mississippi real estate and tangible personal property for the preceding year. If your books show modest capital but you own a warehouse and equipment assessed at $400,000, your franchise tax base starts at $400,000. Owners of capital-light service businesses rarely hit this floor; owners of property-heavy businesses should check it before assuming they owe the minimum.

A quick 2026 example​

Suppose your S corporation has $450,000 of capital employed in Mississippi, and your assessed Mississippi property is $300,000:

1. Start with book capital: $450,000 (above the $300,000 property floor, so book capital controls).
2. Subtract the exemption: $450,000 − $100,000 = $350,000 of taxable capital.
3. Apply the 2026 rate: 350 × $0.50 = $175.

That is down from $262.50 for the same base in 2025. Run the same math at the 2027 rate and the bill is $87.50.

Filing Mechanics: Forms, Deadlines, and TAP​

Mississippi combines its income and franchise taxes on a single return, which keeps the paperwork simple but means the franchise tax inherits the income tax return's deadlines:

• C corporations file Form 83-105, due by the 15th day of the fourth month after the close of the tax year — April 15 for calendar-year filers.
• S corporations file Form 84-105 at the entity level, due by the 15th day of the third month after year-end — March 15 for calendar-year filers.

Returns and payments go through the Mississippi Department of Revenue's Taxpayer Access Point (TAP), the state's online filing portal. A federal extension generally extends the Mississippi filing deadline as well, but an extension to file is not an extension to pay — estimate and pay what you owe by the original due date to avoid interest and penalties.

Two related obligations to keep on your radar:

• Estimated payments. Corporations with Mississippi income tax liability over $200 must make quarterly estimated income tax payments. The franchise tax itself is settled on the annual return, but do not let the shrinking franchise bill distract you from estimated income tax requirements.
• Annual reports. The franchise tax return is separate from the annual report you file with the Mississippi Secretary of State (currently a $25 fee). They share a season but not a system — filing one does not file the other.

What to Do Before Year-End 2026​

With repeal eighteen months away, the 2026 tax year is mostly about clean execution and positioning. Work through this checklist:

1. Confirm your filing obligation. If your corporation is domesticated in Mississippi or qualified to do business there, you file — even at the $25 minimum. If you withdrew or dissolved, confirm the withdrawal is recorded so you are not billed for a ghost entity.
2. Recompute your capital base at the new rate. Do not just copy last year's franchise tax line. Apply the $0.50 rate to capital over $100,000, check the $25 minimum, and test the property-value floor.
3. Review capital employed in Mississippi. Multistate corporations apportion capital to the state. Make sure intercompany accounts, loans to shareholders, and property records support the number — the Department of Revenue can and does ask how you got there.
4. Calendar the 2027 final lap. Next year's return, at $0.25 per $1,000, is the last franchise tax filing most corporations will ever make in Mississippi. Mark it now so the wind-down does not turn into a missed final return.
5. Coordinate with the income tax cuts. Mississippi is cutting individual income tax at the same time — a flat 4% on income over $10,000 for 2026, stepping down toward 3% by 2030. If you are an S corporation owner, model the combined effect: falling franchise tax at the entity level plus falling income tax on your pass-through income.

Common Mistakes That Still Cost Money​

Even a dying tax can bite. These are the errors practitioners see most often during the phase-out:

• Assuming S status exempts you. It does not. S corporations pay franchise tax at the entity level on Form 84-105 every year through 2027.
• Not filing because you owe "almost nothing." The filing requirement stands regardless of the amount due. A missing return draws failure-to-file penalties calculated on the tax due plus a flat penalty component — an expensive outcome for a $25 liability.
• Forgetting the property floor. Book capital below assessed Mississippi property value gets adjusted upward. Check the floor before you file, not after the notice arrives.
• Applying the wrong year's rate. With the rate moving every year, rolling last year's workpapers forward without updating the rate is the single most common arithmetic error. For 2026, the rate is $0.50 — not last year's $0.75.
• Out-of-state corporations ignoring Mississippi nexus. If you qualified to do business in Mississippi for a project or a sales presence, you likely owe franchise tax on Mississippi-employed capital through 2027. Review qualifications you no longer need and withdraw where appropriate.

The Bigger Picture: Mississippi Is Getting Cheaper to Incorporate In​

The franchise tax phase-out is one part of a broader Mississippi tax overhaul. Alongside the franchise repeal, the state's Build Up Mississippi Act is driving individual income tax down on a fixed schedule — 4% in 2026, then 3.75%, 3.5%, 3.25%, and 3% through 2030, with a possible further phase-down after that if revenue triggers are met. The state also cut its grocery sales tax rate in 2025. Taken together, Mississippi is deliberately lowering the cost of basing a business there, and the franchise tax repeal removes a tax that many economists criticize for punishing capital investment — you owe it in loss years just the same as in profitable ones.

If you have been weighing whether to domesticate in Mississippi or qualify there for an expansion, the direction of travel is unmistakable: by 2028, the franchise tax line on your Mississippi return reads zero, permanently.

Keep Your Capital Records Clean for the Final Two Filings​

Here is where bookkeeping earns its keep. Your franchise tax base comes straight from your balance sheet — capital stock, surplus, undivided profits, and reserves — adjusted for Mississippi employment and floored at assessed property value. Corporations with tidy capital accounts, reconciled intercompany balances, and property records that tie to the return can compute the 2026 and 2027 filings in an afternoon. Corporations with messy equity sections end up reconstructing years of history to defend a number on a tax that is about to disappear.

Use the wind-down as a forcing function: reconcile your equity accounts now, document how capital is apportioned to Mississippi, and keep the workpapers with the return. When the final 2027 filing is done, that same clean balance sheet becomes the starting point for life after the franchise tax. If you track your books in plain text, every adjustment is version-controlled and reviewable — exactly the audit trail you want when a state agency asks how you computed a number three years later. The Beancount documentation shows how double-entry plain-text ledgers keep equity accounts honest.

Simplify Your Financial Management​

As Mississippi's franchise tax winds down to zero, keeping clear capital records through the final two filings is what stands between you and an easy repeal. Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data — no black boxes, no vendor lock-in. Get started for free and see why developers and finance professionals are switching to plain-text accounting.