Mississippi Pass-Through Entity Tax

If you own a business in Mississippi, you may be required to pay state sales and use taxes. Mississippi’s Pass-Through Entity (PTE) tax is a state corporate income tax that applies to businesses that are not exempt from the federal corporate tax. The PTE rate is 5%, and the tax must be reported on individual Mississippi personal income tax returns. You can pay these taxes online using the Taxpayer Access Point (TAP) system. Alternatively, you can mail a payment voucher and check to the Mississippi Department of Revenue. To learn more about these taxes, visit the Mississippi Department of Revenue website.

If your business structures itself as a pass-through entity, such as a partnership or LLC, you can make an election to have it taxed at the PTE level instead of at the individual partner or shareholder level. This election will mitigate the impact of the new federal limitation on itemized deductions for state and local income taxes.

Electing Mississippi Pass-Through Entities

To elect the PTE taxation, complete Form 84-381. Enter a “2” in the “Electing PTE taxable income field.” Then, report on your individual return (Form 80-105 for full-year residents and Form 80-205 for part-year residents or nonresidents) the amount of taxable income for which you elected the PTE treatment. Also report any credits used on the return in Box 14.

If an electing PTE makes this election, its members will receive and claim a credit on their returns for the tax paid at the entity level. This will be similar to the traditional claim for credits for tax paid at the partner level. This credit will be reported on the member’s return via a K-1 attached to Form 84-105

How to Calculate The Mississippi Taxable Business Income?

The Mississippi taxable business income is calculated by adding the amount of federal taxable income and subtracting the allowable depreciation and amortization allowances. The total Mississippi taxable business income is then multiplied by the 5% PTE tax rate to calculate the amount of tax due. Nonbusiness income is allocated on lines 10 through 13 of Form 83-110.

Mississippi Pass-through Entity Tax Due Dates

This year, PTEs can make an election to be taxed at the entity level rather than at the partner/member level. The election is made by completing Form 84-381, available via TAP. The return must be filed by March 15 for calendar filers.