Mississippi Franchise Tax Phase-Out: $0.50 per $1,000 in 2026 and Repeal in 2028
Mississippi Franchise Tax Phase-Out: $0.50 per $1,000 in 2026 and Repeal in 2028
The Mississippi franchise tax is a tax on corporations, measured by capital above $100,000 rather than by profit. For tax year 2026 the rate is $0.50 per $1,000 of capital over $100,000, with a $25 minimum. The rate falls to $0.25 for 2027, and the tax is repealed effective January 1, 2028. If you own an LLC, whether this tax applies to you depends on one question: how the LLC is treated for income tax purposes.
This guide covers who owes the tax, how the rate schedule works with dollar examples, how the Mississippi LLC franchise tax question differs from the corporate one, and how the tax fits into the choice between entity types.
Informational content, not legal or tax advice. This guide summarizes Mississippi rules as of October 15, 2026, based on the Department of Revenue and the Mississippi Code. Tax rates, filing rules and deadlines change. Confirm your numbers with the Mississippi Department of Revenue and speak with a qualified CPA or attorney before you choose an entity type or file a return.
What the Mississippi franchise tax is
The franchise tax is a state tax charged for the privilege of operating as a corporation in Mississippi. It is separate from the corporate income tax, so a corporation can owe both. Because the base is capital rather than net income, a corporation can owe franchise tax in a year it shows a loss.
Capital is defined in the Department of Revenue's corporate return instructions. Read that definition and the worksheet that computes it instead of assuming the figure matches your books. The rate applies only to capital above the first $100,000, so a corporation with capital at or below that level owes only the $25 minimum.
Rate schedule from 2025 through the 2028 repeal
The rate is set per $1,000 of capital above $100,000, and it steps down each year until the tax is repealed. The table uses $300,000 of capital as an example.
| Tax year | Rate per $1,000 of capital over $100,000 | Tax on $300,000 of capital |
|---|---|---|
| 2025 | $0.75 | $150 |
| 2026 | $0.50 | $100 |
| 2027 | $0.25 | $50 |
| 2028 onward | Repealed effective January 1, 2028 | $0 |
In the example, the first $100,000 is excluded, leaving $200,000 taxable, or 200 units of $1,000. Multiply 200 by the rate for the year. For 2026 that is 200 times $0.50, or $100. The $25 minimum applies only when the computed amount falls below $25.
No 2026 session bill has amended this schedule. The repeal date is the key planning date. The repeal takes effect January 1, 2028, so the tax is not owed for periods after that date. A fiscal-year filer whose return period straddles January 1, 2028 should confirm with the Department of Revenue how the repeal applies to that return.
Who owes the franchise tax
The tax applies to corporations, including S corporations. Under Miss. Code 27-13-5 it also applies to any entity treated as a corporation for income tax purposes. The test is tax treatment, not the name on the formation document.
Every corporation qualified to do business in Mississippi must file a franchise tax return, even if it is inactive or had no income that year. A dormant corporation that stays on the state's records can still owe the $25 minimum and must still file.
Mississippi LLC franchise tax: the classification question
An LLC is not automatically subject to the Mississippi LLC franchise tax. What matters is how the LLC is classified for income tax. Three cases cover most situations:
- LLC taxed as a partnership: not a corporation, so it owes no franchise tax. Income passes through to the members, who report it on their Mississippi returns.
- Single-member LLC taxed as a disregarded entity: not a corporation, so it owes no franchise tax. The owner reports the business income on their own return.
- LLC that elects corporate treatment: treated as a corporation, so it owes franchise tax on the schedule above and also pays Mississippi corporate income tax.
By default, under federal classification rules, a multi-member LLC is taxed as a partnership and a single-member LLC as a disregarded entity. Neither owes the Mississippi franchise tax unless it has elected corporate treatment. Whether an election makes sense is a question for your CPA, because the franchise tax is only one cost in that decision.
The LLC annual report carries no fee, and the Certificate of Formation costs $50. Neither of those charges is a franchise tax, and neither changes with the LLC's classification.
What corporations file and pay
A corporation carries two state tax obligations: the franchise tax and the corporate income tax. The corporate income tax rates are 0% on the first $5,000 of taxable income, 4% on the next $5,000, and 5% on taxable income above $10,000.
Formation starts with Articles of Incorporation (Form F0001), filed through the Secretary of State for $50. The Corporate Annual Report (Form F0008) costs $25 and is due April 15 for profit corporations. It must be filed online.
How the franchise tax fits into entity choice
Franchise tax is the Mississippi-specific factor in the entity decision. It sits alongside federal tax treatment, owner liability and the cost of ongoing compliance. The table compares the state-level costs of the two paths.
| Factor | LLC taxed as partnership or disregarded entity | Corporation or LLC electing corporate treatment |
|---|---|---|
| Formation filing | $50 Certificate of Formation | $50 Articles of Incorporation |
| Annual report | No fee, due April 15 | $25 for profit corporations, due April 15 |
| Mississippi franchise tax | None | $0.50 per $1,000 over $100,000 for 2026 (minimum $25), $0.25 for 2027, repealed January 1, 2028 |
| Mississippi corporate income tax | Not imposed on the entity; income reported on members' returns | 0% on the first $5,000, 4% on the next $5,000, 5% above $10,000 |
Consider a corporation or electing LLC with $300,000 of capital in 2026. It owes $100 in franchise tax for 2026 and $50 for 2027, in addition to corporate income tax on its taxable income. After January 1, 2028, the franchise tax factor no longer applies, and the decision rests on income tax, ownership structure and how you plan to raise and distribute money.
An S corporation is still a corporation for this purpose. The franchise tax applies to it even though it is a pass-through entity for federal income tax purposes.
Deadlines to put on your calendar
- April 15 each year: LLC annual report (Form F0108). It has no fee, may be filed on or after January 1, and must be filed online. Failure to file can lead to administrative dissolution.
- April 15 each year: Corporate annual report (Form F0008) for profit corporations, $25.
- Franchise tax return: file for each tax year in which the corporation is subject to the tax. This guide does not state a franchise tax due date or payment method, so confirm both in the Department of Revenue's corporate return instructions.
Steps to confirm your numbers
- Confirm your entity's income tax classification with your CPA, and find out whether the LLC has ever elected corporate treatment.
- If you are a corporation or an electing LLC, take the capital figure from your books and apply the Department of Revenue's definition from the return instructions.
- Apply the rate for the tax year: $0.75 for 2025, $0.50 for 2026 or $0.25 for 2027. If the result is below $25, the $25 minimum applies.
- Search the Secretary of State business records to confirm your entity's status: Mississippi Secretary of State business search.
- Recheck the Department of Revenue site before you file, because rules and deadlines can change: Mississippi Department of Revenue.
Frequently asked questions
Does the franchise tax apply to a single-member LLC?
Not by default. A single-member LLC is generally disregarded for income tax and owes no franchise tax unless it elects corporate treatment.
Is the Mississippi franchise tax the same as a business license?
No. Mississippi issues no single statewide general business license. Registering an entity with the Secretary of State is a registration, not a license, and the Department of Revenue sales tax permit is a tax registration. Every city, town and village issues its own privilege license under Miss. Code 27-17, and counties license only businesses outside municipalities. Check with your city or county clerk for local fees, because this guide does not list them.
Did the 2026 Legislature change the franchise tax schedule?
No 2026 session bill has amended the schedule as of this writing. Confirm the current rate with the Department of Revenue before you calculate your tax.
Official resources
- Mississippi Department of Revenue
- Mississippi Secretary of State, Business Services Division
- Secretary of State online filing portal
- Mississippi Small Business Development Center Network
Franchise tax questions are a good fit for a CPA who handles Mississippi entity filings. Choosing between an LLC and a corporation is a question for both a CPA and an attorney. Use the facts in this guide as a starting point, then get your numbers confirmed before you file.
This guide is informational content, not legal or tax advice.