Mississippi Payroll Tax Guide (2026)
Mississippi is on a published path to no income tax at all: the rate is 4% on taxable income above $10,000 for 2026 and steps down to 3.75% in 2027, while the state sets no minimum wage of its own, so the federal 7.25 dollar floor governs.[5]
Mississippi payroll at a glance
Mississippi employers deal with just two state payroll taxes: income tax withholding taken from employees at 4% above a 10,000 dollar threshold, and employer paid unemployment tax on the first $14,000 of wages.[5]
What changed for Mississippi payroll in 2026
Five items moved for Mississippi employers this year. Anything below is what have changed since the 2025 tables, so a rate card carried over from last year will be wrong in at least one place.
2026 Mississippi payroll tax calculator
Enter one employee’s annual gross wages to see what the employer owes, what comes out of the paycheque, and the true cost of employment.
Employer pays
Withheld from the employee
State income tax withholding is not included above: it depends on the employee’s Form 89-350 and filing status, so it cannot be estimated from gross pay alone.
Payroll tax rates & the nexus question
Mississippi runs three state payroll taxes. The table below is the whole state layer for 2026.[5]
The state payroll taxes
| Tax | Paid by | 2026 rate | Wage base |
|---|---|---|---|
| UI | Employer | 0.00%–5.40%; 1.00% new | $14,000 |
| Workforce Investment and Training contribution | Employer | Varies | $14,000 |
| Income tax withholding | Employee | 4.00% flat | No limit |
New employers pay 1.0% in year one, 1.1% in year two and 1.2% from year three until they qualify for a modified experience rate. Modified rates run from 0.0 to 5.4%, are computed from benefits charged to the employer’s account divided by taxable wages paid plus the state’s general experience ratio, and cannot fall below that general experience ratio for the year.[5]
Who has to register
Paying $1,500 or more in wages in a calendar quarter, or having one worker in each of 20 different calendar weeks. Agricultural employers become liable at $20,000 in a calendar quarter or 10 workers across 20 weeks, household employers at $1,000 in a calendar quarter, and 501(c)(3) organizations at four or more workers in 20 weeks.[5] Income tax withholding is administered separately by Mississippi Department of Revenue, so most employers end up with two state account numbers, not one.
Multistate and remote employees
When an employee works in more than one state, the four-part test below decides which state the wages are reported to. The tests run in order: you stop at the first one that gives an answer.
- 1. Localisation of service→
- 2. Base of operations→
- 3. Place of direction & control→
- 4. Employee’s residence
One remote employee is usually enough. A single person working from home in Mississippi generally creates an obligation to register and report wages here, even if the business has no office, property or customers in the state.
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Ask a Payroll SpecialistRegistration & return filing
Registration is online and free. The unemployment account and, where one exists, the withholding account are opened separately and carry different numbers.[5]
How to register
- Cross the wage threshold→
- MDES Online Unemployment Services at accessmstax.mdes.ms.gov→
- Receive account number→
- File & deposit online
Paying $1,500 or more in wages in a calendar quarter, or having one worker in each of 20 different calendar weeks. Agricultural employers become liable at $20,000 in a calendar quarter or 10 workers across 20 weeks, household employers at $1,000 in a calendar quarter, and 501(c)(3) organizations at four or more workers in 20 weeks.[5]
Deposit schedule
Withholding returns and payments are due on the 15th day of the month following the reporting period, moving to the next business day when the 15th falls on a weekend or legal holiday. Accounts are registered and returns filed through TAP, the department’s online system, or transmitted in bulk by an FSET enabled payroll provider.[2]
Returns, reports & due dates
| Form | What it is | Due |
|---|---|---|
| quarterly wage report, filed through MDES Online Unemployment Services | Quarterly unemployment return | April 30, July 31, October 31, January 31 |
| Returns are filed electronically through TAP. W-2 information is due to the department… | Income tax withholding returns | Withholding returns and payments are due on the 15th day of the month |
| Annual reconciliation | Year-end withholding reconciliation | January 31 |
| Form 941 | Federal quarterly return | Last day of the month after quarter end |
| Form 940 | Federal unemployment, annual | January 31 |
| New hire report | Report of newly hired employees | Within 20 days of start date |
Quarterly unemployment returns are due April 30, July 31, October 31, January 31. A return filed one day late is delinquent, and in most states the penalty attaches to the return, not the payment.[5]
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Subject wages vs. exempt payments
Not every dollar an employee receives is a taxable wage. The split below governs what goes into the unemployment wage base and what is reported at year end.[5]
Subject wages
- Salaries, hourly pay, overtime and piece rates
- Commissions, bonuses and incentive pay
- Most cash tips reported by the employee
- Vacation, holiday and paid sick leave when taken as wages
- Severance and payments in lieu of notice
- The cash value of meals and lodging provided as compensation
- Employer contributions to a non-qualified deferred compensation plan
Not subject
- Reimbursements of genuine business expenses under an accountable plan
- Employer contributions to a qualified retirement plan
- Employer-paid premiums for accident and health insurance
- Most third-party sick pay after the sixth calendar month
- Payments to a genuine independent contractor
- Workers compensation benefits
The wage base is per employer, per year, not per job. If you hire someone in August who already earned $14,000 elsewhere, your unemployment clock still starts at zero. The one exception is a successor employer taking over an existing payroll, who inherits the wages already paid.
Glossary of key terms
- Taxable wage base
- The slice of each employee’s annual pay that unemployment tax is calculated on. In Mississippi that is $14,000 for 2026. Earnings above it are still wages, they are simply no longer taxed for unemployment.
- Experience rating
- The method Mississippi Department of Employment Security uses to set each employer’s own unemployment rate from its history of claims. Employers with fewer charged claims move down the schedule; those with more move up.
- New employer rate
- The rate assigned before an employer has enough history to be experience rated. It normally applies for two to three years, then the account moves onto the experience schedule.
- Form 89-350
- The state withholding certificate. It sets how much income tax comes out of each cheque and is filed with the employer, not with Mississippi Department of Revenue.
- Reserve account
- The running balance of contributions an employer has paid in, less the benefits charged against it. The ratio of that balance to taxable payroll is what drives the assigned rate.
- Successor employer
- A business that acquires another’s payroll may inherit both its experience rate and the wages already paid toward the wage base for the year. Getting this wrong is a common acquisition error.
- Localisation of service
- The first of four tests deciding which state a multistate employee’s wages are reported to. If substantially all the work is in one state, that state wins and the remaining tests are never reached.
- FUTA credit reduction
- A reduction in the 5.4% federal unemployment credit applied to states that have carried an outstanding federal loan for two or more consecutive Januaries. It raises the effective FUTA rate and is settled each November.
- Supplemental wages
- Bonuses, commissions, awards and similar payments made outside the regular payroll cycle. Many states set a separate flat withholding rate for them.
Mississippi payroll tax, layer by layer
Federal tax applies everywhere and is the larger number. The state layer is what changes when you cross a border.
Layer 1: Federal
| Tax | Rate | 2026 base |
|---|---|---|
| Social Security | 6.2% each side | $184,500 |
| Medicare | 1.45% each side | No limit |
| Additional Medicare | 0.9% employee only | Over $200,000 |
| FUTA, standard | 0.6% net | $7,000 |
| Federal income tax | Per Form W-4 | No limit |
Mississippi has no FUTA credit reduction for 2026, so the standard 0.6% net rate applies, $42 per employee. The final list is not published until 10 November 2026.[11]
Layer 2: State
| Tax | Rate | 2026 base |
|---|---|---|
| UI, new employer | 1.00% | $14,000 |
| UI, experienced | 0.00%–5.40% | $14,000 |
| Workforce Investment and Training contribution | Varies | $14,000 |
| Income tax, standard | 4.00% flat | No limit |
Layer 3, county & city: no payroll tax, but a wage floor
No county or city in Mississippi levies its own payroll or income tax withheld by employers. The local layer shows up as minimum wage, not as tax.[9]
The state minimum wage is $7.25 an hour, which is the federal floor, effective 2026-01-01. The tipped cash wage is $2.13. No local ordinance sets a higher floor. Mississippi has not enacted a state minimum wage law, so employers subject to the federal Fair Labor Standards Act must pay at least the federal rate. Tipped employees follow the federal rules: a 2.13 dollar cash wage, a maximum 5.12 dollar tip credit, and the employer makes up any shortfall to $7.25.[9]
Overtime exemption is a separate test. A salaried employee is exempt from overtime only above $35,568 a year ($684.00 a week) federal FLSA, and only if the duties test is also met. Paying a salary is not by itself enough.[10]
Mississippi payroll FAQs
Mississippi taxes the first $10,000 of taxable income at zero percent and everything above that at 4% for 2026. The rate is scheduled to fall to 3.75% in 2027 and continue down to 3.0% by 2030. Employees claim their filing status and exemption amount on Form 89-350.
New employers pay 1.0% in the first year, 1.1% in the second and 1.2% from the third year until they earn a modified experience rate. All of it applies to the first $14,000 of each employee’s wages, so a first year employer pays at most $140 per employee.
State withholding returns and payments are due the 15th of the month following the period. Unemployment wage reports and payments are due the last day of the month following each quarter: April 30, July 31, October 31 and January 31. W-2 information goes to the Department of Revenue by January 31 and 1099 information by February 28.
No. Mississippi has never enacted one, so employers covered by the federal Fair Labor Standards Act must pay at least $7.25 an hour. Tipped employees follow the federal rules, with a 2.13 dollar cash wage and a maximum 5.12 dollar tip credit, and the employer must make up any shortfall.
No. Mississippi has no employee paid unemployment contribution, no state disability insurance and no paid family leave premium. Unemployment tax is entirely an employer cost, and there are no local income or earnings taxes anywhere in the state.
Register once you pay $1,500 or more in wages in a calendar quarter or have at least one worker in 20 different calendar weeks. Agricultural employers register at $20,000 in a quarter or 10 workers across 20 weeks, household employers at $1,000 in a quarter, and 501(c)(3) organizations at four or more workers in 20 weeks.
$14,000 per employee per calendar year. Once an employee reaches that in wages from you, no further unemployment tax is due on that employee for the rest of the year. The count restarts on 1 January and does not carry over from a previous employer.
$7.25 an hour, which matches the federal floor. No local ordinance sets a higher rate. The tipped cash wage is $2.13.
April 30, July 31, October 31, January 31. A return is delinquent the day after the deadline even if the tax itself was paid on time, so file the return whether or not you can pay.
Sources & methodology
- Mississippi Department of Revenue – General Information, individual income tax rates
- Mississippi Department of Revenue – Withholding Tax
- US Department of Agriculture, National Finance Center – Bulletin: Mississippi State Income Tax Withholding
- Mississippi Institutions of Higher Learning – Fiscal and Economic Analysis of House Bill 1
- Mississippi Department of Employment Security – Unemployment Tax Rates
- Mississippi Department of Employment Security – Employer FAQs
- Mississippi Department of Employment Security – Quarterly Report and Tax Due Dates
- Mississippi Department of Employment Security – Unemployment Tax overview for employers
- US Department of Labor, Wage and Hour Division – State Minimum Wage Laws
- US Department of Labor, Wage and Hour Division – Fact Sheet 17A: Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees
- US Department of Labor, Federal Register – Notice of the Federal Unemployment Tax Act (FUTA) Credit Reductions Applicable for 2025
- Office of Governor Tate Reeves – Gov. Reeves Signs Historic Legislation Eliminating Mississippi’s Individual Income Tax
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