Sales and Use Taxes in Mississippi

April 13, 2006

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In Mississippi the sales tax is levied on the privilege of engaging in business. The tax is measured by the gross proceeds of sales that are derived from the business or occupation. The tax is imposed on the gross proceeds of sales of tangible personal property and sales of many services.

Sales and use tax rate. The Mississippi sales and use tax rate is generally 7 percent. (In addition, make sure you contact your local governments in Mississippi because they are allowed to assess a local sales and use tax.) The following are the tax rates for the main categories of taxable items in Mississippi:

Tangible personal property. Generally the rate of tax on services and on the sale of tangible personal property is 7 percent.
Salesmen's tax. A tax is imposed on every salesman engaged in the itinerant solicitation and taking of orders for tangible personal property by use of the highways of Mississippi for subsequent delivery to retailers or consumers in Mississippi. The tax rate is 3 percent of the amount of orders from consumers and 0.125 percent if the order is from retailers for resale.
Farming and/or farmers. The tax rate is 3 percent on sales to farmers of qualified farm equipment.
Transportation equipment. The tax rate is 3 percent on retail sales of aircraft, automobiles, trucks, truck-tractors, semitrailers, and mobile homes.
Carriers. The tax rate is 5 percent of sales of private carriers of passengers and light carriers of property.
Vending machines. The tax rate is 8 percent of wholesale sales of food and drink to vending machine operators. The food and drink must be for sale through vending machines located apart from and not connected with other taxable businesses.
Utilities for industry and agriculture. The tax rate is 1.5 percent of sales of gas, petroleum, electricity, or other fuels for industrial and agricultural purposes.
Construction. The tax rate is 3.5 percent for construction contracts exceeding $10,000 (other than residences).
Manufacturing equipment. The tax rate is 1.5 percent on sales of manufacturing machinery and manufacturing machine parts.
Amusements. Generally the tax rate is 7 percent on amusements, except for those that are conducted in publicly owned, enclosed coliseums and auditoriums, which are taxed at a 3 percent rate.
Room rental and services. The tax rate is 7 percent on miscellaneous businesses and services, including room rentals.

Tax-exempt items. Mississippi has many specific items that are exempt from sales tax — for example, certain prescription medications are exempt from Mississippi sales tax. You'll want to check and see if you are exempt from the sales tax.

Responsibility for paying sales tax. In Mississippi the seller must add the tax to the sales price and collect the tax from the purchaser at the time the sales price or gross income is collected. The tax is a debt from the purchaser to the seller until paid. The tax must be stated separately from the sales price on the sales invoice and shown separately on the seller's records.

Use tax. The use tax is imposed for the privilege of using, storing, or consuming within Mississippi any tangible personal property, possession of which is acquired in any manner.

Responsibility for collecting use tax. The compensating (use) tax is a tax imposed on the privilege of using, storing, or consuming within Mississippi any article of tangible personal property, regardless of the manner in which possession of the property was acquired.

Obtaining tax permits in Mississippi. In Mississippi every person engaging in a business subject to the sales tax must secure a license. The license is valid indefinitely and is obtained from the State Tax Commission.

Leases. In Mississippi, property is considered rented when the lessor grants its use and possession for a consideration. Rental or lease transactions are subject to sales tax in the same manner as sales transactions. Charges to lessees for such items as repairs, transportation, hotels, meals, and supplies are subject to sales tax.

The following discussions address common sales and use tax issues that many small business owners face: