Mississippi Repeals Its Franchise Tax in 2028. Here Is What a Corporation Still Owes Until Then

2026-10-15 · RKube Services

Mississippi's franchise tax drops to $0.50 per $1,000 for 2026 and $0.25 for 2027, then is repealed in 2028. What a corporation still owes, when it's due and the $25 minimum.

Mississippi has been shrinking its corporate franchise tax for years, and the end is close. The rate drops again for 2026, drops once more for 2027, and the tax is repealed effective January 1, 2028. That's good news for every corporation in the state, but it doesn't mean you can stop thinking about it. Corporations still owe franchise tax for 2025, 2026 and 2027, the $25 minimum still applies, and the last return won't be filed until 2028.

This guide covers who pays the tax, how it's calculated, what a small corporation actually owes each year until repeal, when the return is due, and what happens if it's late. Every fact comes from the Mississippi Department of Revenue (MS DOR): the 2025 Form 83-100 corporate income and franchise tax instructions and DOR's corporate income and franchise tax FAQs.

The short version

• Rates, per $1,000 of capital over $100,000: $0.75 for tax year 2025, $0.50 for 2026, $0.25 for 2027. Repealed effective January 1, 2028.
• Minimum: $25 a year, for every year the tax still exists.
• Who pays: C corporations and S corporations. DOR's FAQ says all S corporations are subject to franchise tax at the entity level. An LLC pays only if it's taxed as a corporation.
• Due date: the 15th day of the 4th month after year-end for C corporations (April 15 for calendar years). S corporations and other pass-through entities file by the 15th day of the 3rd month (March 15).
• Inactive corporations still file. A corporation domesticated or qualified in Mississippi files every year until it's formally dissolved or withdrawn with the Secretary of State.

Where the phase-out came from

The phase-out was set by Senate Bill 2858 in the 2016 session. DOR's instructions say the franchise tax would be completely phased out over a nine-year period ending with tax year 2027, starting in tax year 2018. The schedule in the instructions shows how far it has come:

For tax years beginning before 2020 the rate was higher still, so many owners remember a much larger bill. The tax that's left is small, but it isn't zero yet.

What the tax is (and why non-franchises pay it)

The name confuses people. DOR's FAQ answers the question directly: the franchise tax has nothing to do with whether your business is a franchise. It's a tax every corporation pays for the privilege of doing business in Mississippi, and it's due each year as long as the corporation stays incorporated, domesticated or doing business in the state.

Who files

• C corporations file the combined income and franchise tax return, Form 83-105.
• S corporations file as pass-through entities. The income passes to shareholders, but the franchise tax is paid at the entity level.
• LLCs follow their federal classification. An LLC taxed as a partnership files as a pass-through entity and doesn't pay corporate franchise tax. An LLC taxed as a corporation files as a corporation for both income and franchise tax.
• Foreign corporations doing business in Mississippi, or with Mississippi income, are subject to the tax even if they never qualified with the Secretary of State.
• Inactive corporations still file every year until the corporation is dissolved or withdrawn.

How the tax is calculated

The franchise tax is measured by capital employed in Mississippi. The 83-100 instructions describe capital as capital stock, surplus, undivided profits and true reserves, and they say net book value, as you regularly keep it, is accepted as the starting point. You work it out on Form 83-110, using the balance sheet at the end of your accounting year.

Three points matter for small corporations:

1. The base is the greater of two numbers. DOR's FAQ says the tax is computed on the value of capital employed or the assessed value of property in Mississippi, whichever is greater.
2. The first $100,000 is excluded, then each $1,000 (or fraction of $1,000) above that is taxed at the year's rate.
3. The $25 minimum always applies. If the math comes out lower, you pay $25.

Some items stay out of capital, such as debts, notes and mortgages that are due and payable, depreciation reserves and bad-debt reserves, unless they're between affiliated companies or shareholders. A corporation that does business inside and outside Mississippi apportions its capital using property and gross receipts. Mississippi doesn't allow combined franchise tax returns, so each subsidiary files its own.

Worked example: what a small corporation owes until repeal

Take three calendar-year MS corporations and run each through the remaining years:

The small S corp pays the $25 minimum for all three years. The Gulfport company's bill falls by a third, then by half. The distributor saves $575 from 2025 to 2026 alone. In each case the assessed value of Mississippi property should be checked too, since the tax uses the greater of capital or assessed value.

The last return is filed after repeal

Here's the part owners miss. Repeal is effective January 1, 2028, but tax year 2027 still carries the $0.25 rate. A calendar-year C corporation files its 2027 return by April 15, 2028, and an S corporation by March 15, 2028. So the franchise tax line on your return doesn't vanish until the 2028 tax year.

Fiscal-year corporations need one more look. DOR's FAQ ties each rate to tax years beginning on or after January 1 of a year and before January 1 of the next. A fiscal year that starts July 1, 2027 begins before January 1, 2028, so it falls in the $0.25 bracket. Read the FAQ for your exact year before you assume you owe nothing.

Due dates, extensions and payments

• C corporations: the 15th day of the 4th month after year-end. For calendar 2026, that's April 15, 2027.
• S corporations and other PTEs: the 15th day of the 3rd month after year-end. For calendar 2026, that's March 15, 2027.
• Weekends and holidays push the due date to the next business day.
• Extensions: Mississippi follows federal extended due dates, but an extension only extends the time to file. Any tax due has to be paid with Form 83-180 by the original due date.
• Filing method: DOR requires corporations, S corporations and partnerships with $250,000 or more in assets to file electronically. Failing to e-file can bring a $25 penalty for the first instance.
• Paying: you can pay through DOR's Taxpayer Access Point (TAP).

Estimated payments in the instructions apply to income tax. A corporation with an annual income tax liability over $200 has to pay at least 90% of the current year's income tax in quarterly estimates.

Penalties, interest and suspension

The 83-100 instructions and DOR's FAQ list the charges for late returns and payments:

• Late payment: interest at 1/2 of 1% per month from the due date until paid, plus a penalty of 1/2% per month, capped at 25%.
• Late or missing return: a penalty of 5% per month on the tax due, capped at 25%. For income tax, it's never less than $100.
• Incomplete return: $25 per missing required attachment or schedule, up to $500 per return. Leaving off the balance sheet is a common trigger.

A bigger risk sits outside the dollar amounts. DOR's FAQ says the department has to notify the Secretary of State when an entity fails to file or pay a franchise tax return. That can lead to suspension of the corporation's standing. For a small company, that's far worse than a $25 bill. A suspended corporation can lose its good standing with banks, landlords and customers who ask for a certificate.

Should you dissolve, convert or just wait?

For a corporation that's still operating, the phase-out doesn't change much. You keep filing until 2027 is done, and the bill keeps shrinking. For a dormant corporation it's a different question. It owes at least $25 a year and a full return every year until it's formally dissolved or withdrawn. If a corporation has no future, closing it properly with the Secretary of State, and filing the final returns, ends the filing duty. Talk through the timing before you dissolve, since a dissolution has its own final-return and tax-clearance steps.

A checklist for Mississippi corporations, 2026 to 2028

1. Confirm your MS classification. C corp, S corp, or LLC taxed as a corporation all pay; a partnership LLC doesn't.
2. Pull your year-end balance sheet and complete the MS Form 83-110 for capital employed in Mississippi.
3. Compare capital with assessed property value and use the greater.
4. Apply the right rate: $0.50 for 2026, $0.25 for 2027, $25 minimum.
5. Mark the due date: March 15 for S corps, April 15 for calendar C corps.
6. Pay with the extension if you extend. The extension doesn't extend payment.
7. File every schedule, including the balance sheet, to avoid the $25-per-schedule penalty.
8. Plan the 2027 return, due in 2028, as the last one with a franchise tax line.
9. Close dormant corporations properly instead of letting them lapse.

Common questions

What is the Mississippi franchise tax rate for 2026? $0.50 per $1,000 of capital over $100,000 for tax years beginning in 2026, with a $25 minimum.

When is the Mississippi franchise tax repealed? Effective January 1, 2028. Tax year 2027 is the last year, at $0.25 per $1,000 of capital over $100,000.

Do S corporations pay Mississippi franchise tax? Yes. DOR's FAQ says all S corporations are subject to franchise tax at the entity level, even though their income passes through to shareholders.

Do LLCs pay Mississippi franchise tax? Only if the LLC is taxed as a corporation. An LLC taxed as a partnership files as a pass-through entity without corporate franchise tax.

What is the minimum Mississippi franchise tax? $25 a year, for every year through 2027.

Does an inactive corporation have to file? Yes. A corporation domesticated or qualified in Mississippi files every year, even if inactive, until it's dissolved or withdrawn with the Secretary of State.

When is the Mississippi corporate franchise tax return due? The 15th day of the 4th month after year-end for C corporations, and the 15th day of the 3rd month for S corporations and other pass-through entities.

This guide is general information about the Mississippi franchise tax as of October 2026, not legal or tax advice for your situation. Confirm current rules with the Mississippi Department of Revenue before you file.

For help closing out the last three franchise returns alongside your books and income tax, RKube Services works with Mississippi corporations: rkubeservices.com.