Comprehensive Guide to Payroll Taxes in Mississippi

In the US, employers must navigate complex federal and state-specific regulations and requirements for payroll withholding and payments to maintain compliance. This article serves as a comprehensive guide for employers in Mississippi.

Overview

Mississippi employers are legally required to withhold and remit state and federal taxes on behalf of their employees, including FICA tax and personal income taxes such as federal income tax and state income tax. No cities in the state levy local income taxes.

Employers in Mississippi must also contribute to programs such as state unemployment insurance (SUI) and workers' compensation insurance, as well as paying federal FICA Tax and federal unemployment tax (FUTA).

State unemployment insurance

State unemployment insurance (SUI) is an employer-funded program that provides temporary financial assistance to eligible individuals who have lost their jobs and are actively seeking employment.

In Mississippi, the initial tax rate for new businesses is set at 1.00% in the first year of liability, increases to 1.10% in the second year, and rises to 1.20% in the third and subsequent years until the business qualifies for a modified rate. These rates don't include any additional contributions for workforce investmenta nd training that may apply for the rate year.

Your modified rate tax rate could vary from 0.0% to 5.4%, calculated based on the ratio of benefits charged against the employer's account to taxable wages paid), along with the general experience ratio of the state's unemployment program.

In Mississippi, employers are responsible for paying unemployment insurance. To file quarterly unemployment tax reports and make payments electronically, employers should register and use the Mississippi Department of Employment Security's (MDES) secure online system.

Personal income tax

In addition to federal income tax, Mississippi employers are required to withhold and remit state income tax (SIT) from their employees' wages. SIT in Mississippi applies to an employee's annual taxable income above $10,000 at a rate of 4.7% in 2024. This rate will drop to 4.4% for the 2025 tax year, then to 4% in 2026.

You can register, manage, and pay SIT through the Mississippi Taxpayer Access Point (TAP), which is Mississippi’s official online portal. You must submit withholding returns by the 15th of the following month, or the next business day if this falls on a weekend or legal holiday.

Under Mississippi law, reports must be filed and taxes must be paid by the end of the month following the end of the calendar quarter being reported. Interest is charged at a rate of 1% per month on any overdue payments, accruing from the due date until the full balance of taxes, penalties, and interest is paid.

In addition to interest, penalties are also applied. The total penalties for any calendar quarter will generally not exceed 20%. Employers incur a late filing penalty imposed if the report isn't filed within 30 days of its due date, at additional 10% of the tax owed. A further 10% penalty applies if the payment is late by 60 days or a warrant for collection is issued.

For more information on paying the withheld income tax, you can consult the Mississippi Department of Revenue online.

Workers’ compensation

Mississippi employers with five or more employees in the state are legally required to provide workers' compensation coverage. Severe penalties apply for non-compliance.

Workers’ compensation gives benefits to employees who are injured or who contract an occupational illness to support loss of wages, medical expenses, and more. It also provides legal protection for employers and employees.

In Mississippi, workers’ compensation is usually purchased through a qualified commercial carrier. Some employers choose to apply to self-insure. It's administered by the Mississippi Workers' Compensation Commission.

Simplify US payroll tax compliance with Deel

Our comprehensive solution helps business owners manage US and international payroll, considering payments, taxes, worker classification, and risk mitigation. Create a more efficient and compliant payroll system and request a Deel demo today.