Mississippi payroll tax has two state pieces sitting on top of the usual federal ones: a flat 4% state income tax that employers withhold from wages above $10,000 per employee, and an employer-paid unemployment insurance contribution on the first $14,000 of each employee’s annual wages. Mississippi does not impose a state disability insurance tax or a paid family and medical leave tax, so once you handle withholding and unemployment, the state side is done.
State Income Tax Withholding
For the 2026 tax year, Mississippi’s individual income tax is a flat 4.0% on taxable income above $10,000. The first $10,000 of an employee’s taxable income is not taxed. This is the final step of the phase-in under the Mississippi Tax Freedom Act of 2022, which set 4.7% for 2024 and 4.4% for 2025 before landing at 4.0%.1Mississippi Department of Revenue. General Information
Withholding applies to wages, salaries, commissions, bonuses, vacation pay, and taxable fringe benefits paid to anyone performing services in Mississippi. How much you withhold for each employee depends on the exemptions they claim on Form 89-350, the Mississippi Employee’s Withholding Exemption Certificate. The personal exemption amounts are $6,000 for a single filer, $12,000 for a married couple filing jointly, and $9,500 for head of family, plus $1,500 per dependent. If an employee never turns in a Form 89-350, you must withhold on the full wage amount with no exemption benefit.2Mississippi Department of Revenue. Mississippi Employee’s Withholding Exemption Certificate Employees are required to file a new certificate within 30 days of any change in exemption status, such as marriage or the birth of a child.
One thing to know about the employer’s exposure: under Mississippi Code 27-7-307, you are personally liable for the amounts you were required to withhold, whether or not you actually deducted them from the employee’s pay. That liability can reach individual owners too — anyone holding at least 10% of a corporation’s stock or an LLC’s interest who exercises fiscal management responsibility can be held personally liable for unpaid withholding, plus interest and penalties.3Justia. Mississippi Code 27-7-307 – Employer and Certain Persons
Filing and Paying Withholding
Withholding returns are due by the 15th of the month following the reporting period. If that date falls on a weekend or legal holiday, the deadline moves to the next business day. The Mississippi Department of Revenue assigns your filing frequency; you don’t pick it. Transient employers (nonresidents temporarily doing business in the state) and seasonal employers are automatically assigned monthly filing. All returns and payments go through the Department of Revenue’s Taxpayer Access Point (TAP).4Mississippi Department of Revenue. Withholding Tax
Mississippi Unemployment Insurance Tax
Unemployment insurance in Mississippi is funded entirely by employers. Employees pay nothing into it. The tax applies to the first $14,000 of each employee’s annual wages.5Justia. Mississippi Code 71-5-351 – Payment of Contributions
New employers pay a set rate until they’ve built enough claims history for an experience rating. Under Mississippi Code 71-5-353, the schedule is 1.0% of taxable wages in the first year, 1.1% in the second, and 1.2% in the third year and beyond, until you qualify for an experience-based rate. Once your experience record has been chargeable for at least 12 consecutive months as of the most recent computation date, your rate shifts to an experience-based calculation ranging from 0.0% to 5.4%, driven by the volume of unemployment claims filed by former employees.6Mississippi Department of Employment Security. Unemployment Tax Rates
On top of that base rate, every employer pays an additional 0.20% workforce training contribution on taxable wages, collected alongside the regular unemployment contribution.7Justia. Mississippi Code 71-5-353 – Rate of Contributions
Quarterly Due Dates
Unemployment reports and payments are filed quarterly through the Mississippi Department of Employment Security’s online portal. Each report requires individual employee wage data for the quarter. The due dates:
- First quarter (January–March): April 30
- Second quarter (April–June): July 31
- Third quarter (July–September): October 31
- Fourth quarter (October–December): January 31
If any due date falls on a weekend, the deadline moves to the next business day.8Mississippi Department of Employment Security. Quarterly Report and Tax Due Dates
Federal Payroll Taxes You Also Handle
The state pieces sit on top of federal payroll taxes, which are usually the larger obligation.
FICA funds Social Security and Medicare. The Social Security portion is 6.2% of wages up to the annual wage base, paid by employer and employee each. Medicare is 1.45% each for employer and employee, with no wage cap. Employees earning over $200,000 in a calendar year owe an additional 0.9% Medicare tax that the employer withholds but does not match. Federal income tax withholding runs off the employee’s Form W-4 and the IRS withholding tables.
Federal unemployment tax (FUTA) is 6.0% on the first $7,000 of each employee’s annual wages, but employers who pay state unemployment taxes on time receive a 5.4% credit, cutting the effective rate to 0.6%. Mississippi is not currently on the federal credit reduction list, so the standard 0.6% applies. FUTA is employer-only; there’s no employee share. The $7,000 federal wage base is separate from Mississippi’s $14,000 state unemployment wage base.9IRS. Topic No. 759, Form 940, Employers Annual Federal Unemployment Tax Act (FUTA) Tax Return
Getting Registered
Start with a federal Employer Identification Number (EIN) from the IRS. That number identifies your business for every federal and state tax account you’ll open.
For state income tax withholding, register through TAP. The registration asks for your EIN, the date you first paid wages in Mississippi, your business address, and your payroll frequency. TAP handles both the initial registration and ongoing filing.10Mississippi Department of Revenue. Register for Taxes
For unemployment insurance, register separately with the Mississippi Department of Employment Security. Once you’re registered, MDES issues your state unemployment account number and your assigned tax rate, and you use the MDES portal to file quarterly wage reports and make payments.11Mississippi Department of Employment Security. Unemployment Claims
Then collect a completed Form 89-350 from every employee before the first paycheck goes out.
New Hire Reporting
Mississippi requires employers to report every newly hired or rehired employee to the Mississippi State Directory of New Hires within 15 days of the hire date. A “rehire” is someone who was separated from your employment for at least 60 consecutive days. The report must include the employer’s business name, the employee’s name, Social Security number, and the date services began.
Miss it and the penalty is up to $25 per unreported employee. If the state finds a deliberate agreement between employer and employee to avoid reporting, the penalty rises to $500 per employee.12Mississippi State Directory of New Hires. Law
How Long to Keep Payroll Records
The Mississippi Department of Revenue requires employers to keep payroll and tax records for at least three years, including withholding records, quarterly unemployment reports, and any documentation used to calculate the tax owed.13Mississippi Department of Revenue. Record Keeping and Document Retention Federal rules generally require four years for employment tax records, so keeping everything for four years covers both.