Payroll tax in Mississippi: What employers need to know [2024]

Ask any group of people if they like paying taxes, and you’ll likely get a chorus of noes. But taxes are necessary—how else would we pay for things like highways, schools, and benefits like Medicare? In the US, employers are responsible for federal income taxes, FICA taxes, and state payroll taxes. Like every state, Mississippi has its own tax laws that you’ll need to understand if you do business or hire employees there.

Despite its relatively simple flat-rate income tax system, employers must also calculate and account for other state employment taxes in Mississippi. 

For employers in the Magnolia State, whether you're running a small business or a large corporation, it’s critical to have a handle on state taxes. You need to know who pays what, how much, when, and to which state agency. Let’s explore the details. 

The 2 Mississippi payroll taxes

Mississippi has two types of state payroll taxes: unemployment insurance tax and state income tax. The employer pays unemployment insurance tax to the Mississippi Department of Employment Security and income tax to the Mississippi Department of Revenue. The Mississippi Income Tax Withholding Law of 1968 requires tax withholding for all employees making taxable wages in the state, regardless of residency. In both cases, the employer is responsible for remitting the correct amount to the relevant state agency by the corresponding due date.

Note that employers are responsible for reporting new employees and rehires to the Mississippi State Directory of New Hires within 15 days. You may also register new hires and rehires directly with the Mississippi Department of Employment Security, although this is voluntary.

Unemployment insurance tax 

Mississippi’s state unemployment insurance (SUI) is part of a federal program (FUTA) administered by the US Department of Labor under the Social Security Act. The program offers temporary payments to people who are unemployed due to factors outside their control, like layoffs. The state’s unemployment insurance tax funds these payments, and the Mississippi Department of Employment Security sets the rates. Employers are liable for paying unemployment taxes if they: 

• Acquire a business that is already liable to pay SUI
• Meet liability thresholds based on their employment record

They can also voluntarily elect to pay SUI.

Most businesses are liable for SUI if they pay $1,500 in wages in a calendar quarter or have at least one worker performing services for part of a day in 20 different calendar weeks of a calendar year. There are different thresholds for domestic workers, agricultural workers, and nonprofit employees. 

New employers pay 1% during the first year, 1.1% during the second year, and 1.2% in the third year. After that, employers may be eligible for a modified rate based on different criteria. These rates don’t include the Workforce Investment and Training Contribution rate, if applicable.

Personal income tax

Personal income tax (PIT) in Mississippi funds many of the state’s public services, including schools, roads, and healthcare. Employers withhold personal income tax from their employees and remit it to the Department of Revenue. Mississippi has a flat income tax rate set by state legislation.

The amount of taxes an employer withholds is based on the Mississippi Employee’s Withholding Exemption Certificate (Form 89-350), which all employees must complete and sign. These forms are then used with the state’s current tax tables to determine the withholding amount. The withholding tables are based on various factors, including pay periods, filing status, employee wages (tax brackets), exemptions, and tax credits. If you want to do a quick calculation to estimate an employee’s withholding tax, simply apply the 5% rate to their taxable income over $10,000. 

Navigating payroll in Mississippi is fairly easy compared to other states, but keeping up with new legislation and changing tax rates can be difficult—especially if your workforce is spread out across the country. Rippling’s payroll software makes it easy to stay compliant no matter where you operate. Rippling automatically calculates your taxes, submits your tax forms and payments, and ensures you comply with federal, state, and local tax laws. If you’re looking for more help, Rippling’s PEO can register and maintain your Mississippi state tax accounts, automating another area of the payroll tax process.

Payroll tax due dates in Mississippi

Mississippi has different due dates for its payroll taxes based on the average income tax withheld. 

For the income withholding tax, the date depends on the average amount of tax your business withholds each month. If your business has an average tax liability of $300 or more, you must file your return monthly. Employers with a smaller tax liability can file quarterly. 

If the due date falls on a weekend or recognized holiday, submit it by the next business day. Remember, late payments will incur a 10% penalty plus interest. The due dates for income tax withholding are as follows:

Wage reports and unemployment insurance taxes are due quarterly by the last day of the month following each calendar quarter. If the due date falls on a weekend or holiday, reports and taxes are due on the following business day. Late payments will be charged 1% interest per month or portion thereof, plus penalties until paid. The due dates are as follows:

How to submit payroll taxes in Mississippi

We’ve looked at Mississippi’s payroll taxes and when they’re due. The next step is to pay them. 

Personal income withholding tax 

Every employer in Mississippi is required to set up a withholding tax account with the Department of Revenue. You can register online through the state’s Taxpayer Access Point (TAP). It takes about ten days for the account to become active. Once registered, employers will receive documentation about Mississippi’s withholding tax, filing requirements, and due dates. 

Mississippi employers with a withholding liability of $20,000 or more in any reporting period must file and pay electronically. Employers may also bulk file through the Federal/State Employment (FSET) program. If you choose to use FSET, you don’t have to use TAP.

If you’re unable to file electronically, you must contact the Registration Branch to explain why:

Registration Branch
PO Box 1033
Jackson, MS 
39215 

Telephone: (601) 923-7700

Unemployment insurance tax

Employers must be registered with the MDES online system to file and pay quarterly unemployment tax and wage reports electronically. Wage reports can also be mailed to:

Mississippi Department of Employment Security
Tax Department
PO Box 22781
Jackson, MS 39225-2781

Rippling’s full-service payroll software

The process of preparing and filing taxes in Mississippi is relatively straightforward, but there's an even easier way: Rippling’s payroll software. It’s so powerful it practically runs itself. Rippling handles your compliance work automatically, ensuring your federal and Mississippi state payroll taxes are paid on time and to the right agencies. 

FAQs about Mississippi payroll taxes

Are there local tax laws in Mississippi?

No. Mississippi doesn’t have county or municipal personal income tax laws. 

Does Mississippi have reciprocal tax agreements with other states?

No. If your employee works in the State of Mississippi but lives out of state, you still withhold Mississippi income tax from their wages.

Can your tax returns be audited in Mississippi?

Yes. The Mississippi Department of Revenue and the Department of Employment Security conduct audits to ensure that businesses in the state are paying the correct amount of taxes. 

Are nonprofit organizations subject to payroll taxes in Mississippi?

Yes. In Mississippi, nonprofit organizations are subject to payroll taxes.​

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.