EXISTING MANUFACTURER TAX CREDITS
Income tax credits for existing manufacturers that have operated in Mississippi for at least two years are available if an existing manufacturer invests at least $1,000,000 in additional buildings and/or equipment. The company is eligible for an income tax credit of 5% of the approved investment.
This credit is allowed for the year that the investment occurs, and can be carried forward for up to five years, with the maximum tax credit allowed on any project being $1,000,000.
JOBS TAX CREDITS
Jobs tax credits are available to certain types of businesses that create and sustain new jobs in Mississippi. The following businesses qualify for these credits:
Manufacturers, Wholesalers, Processors, Research and Development, Distributors, Warehousers, Air and Transportation Maintenance Facilities, Telecommunications Companies, Data and Information Processing Companies, Computer Software Development Enterprises, Recreational Facilities that impact Tourism, Resort hotels having a minimum of 150 rooms, Movie Industry, and Technology intensive facilities.
Jobs tax credits are taken against Mississippi corporate income tax. This credit is calculated as a percentage of eligible payroll each year for five years, based on job location and salary paid. The credits are taken in years two through six after the new jobs are created.
Counties in Mississippi are each placed into one of three Tiers based on the county's level of economic development. Hinds County is a Tier I county. Based on these tiers, the jobs credits are available as shown below:
| County Classification |
Jobs |
Credit Amount |
| Tier III |
10 or more |
10% of Payroll |
| Tier II |
15 or more |
5.0% of Payroll |
| Tier I |
20 or more |
2.5% of Payroll |
To be eligible for this credit the employer must create and maintain an annual average employment of the minimum number of jobs required based on location. Unused jobs tax credits can be carried forward up to five years.
Rural Economic Development (RED) Tax Credit
(§ 27-7-22.3)
Rural Economic Development (RED) credits are taken against Mississippi corporate income tax. RED credits are used in conjunction with industrial revenue bonds issued by the Mississippi Business Finance Corporation (MBFC). The credits are based on the amount of bond-related debt service and can be used to offset up to 80% of the state corporate income tax liability attributable to the project each year for the life of the bonds. Unused RED credits may be carried forward for three years.
Businesses that qualify for bonds include:
- Manufacturers;
- Telecommunications companies, Data information and processing facilities, and distribution and warehouse facilities with 50 employees, or 20 employees and a minimum capital investment of $5,000,000;
- National or Regional Headquarters with 35 jobs and a minimum capital investment of $2,000,000; and
- Research and Development or technology intensive enterprises with a minimum of 10 employees earning at least 150% of the average state wage and having a minimum capital investment of $2,000,000.
In instances where a company already has a presence in Mississippi and plans to expand its facility, a formula is used to determine what percentage of the income can be offset from the credits generated by debt service. The percentage is calculated using a three-factor ratio, with the new-to-existing jobs percentage double weighted against the new-to-existing assets percentage.
Child/Dependent Care Tax Credit
(§ 57-73-23)
An income tax credit of 50% of the actual costs of employer-sponsored dependent day care is available to all types of businesses, provided that the child or dependent care is certified by the Mississippi Department of Health. This credit is limited to 50% of the Mississippi income tax liability and unused credits can be carried forward up to five years.
The net cost of any contract executed by the employer for a third party to provide dependent day care is a qualified expense. If the employer elects to provide dependent care directly, the qualified expenses include expenses for staff, learning and recreational materials and equipment, and costs associated with constructing and maintaining the daycare facility.
- These expenses are net of any reimbursement.To qualify, the dependent care must:
- Provide childcare for no less than six children 12 years of age or younger;
- Provide child and/or elder care for 5 or fewer individuals approved by the Department of Health for participation in the US Department of Agriculture child and adult nutrition program;
- Provide care to children over 12 years of age but less than 18 years of age;
- Provide care to adult relatives of employees; or
- Provide care to children or adult dependents with physical, emotional, or mental disabilities.
Skills Training Tax Credit
(§ 57-73-25)
An income tax credit of 50% of the actual costs of employer-sponsored training is available to certain types of businesses that provide skills training to Mississippi employees.
The training must be offered or approved by the community college in the district where the business is located. Qualifying businesses are:
Manufacturers, Wholesalers, Processors, Research and Development, Distributors, Warehousers, Air and Transportation Maintenance Facilities, Telecommunications Companies, Data and Information Processing Companies, Computer Software Development Enterprises, Recreational Facilities that impact tourism, Resort Hotels having a minimum of 150 rooms, Movie Industry, and Technology intensive facilities.
This credit is limited to 50% of the Mississippi income tax liability and can be carried forward up to five years from the year that costs were incurred.
- Businesses that create positions engaged in research and development activity are eligible to receive a $1,000 tax credit for each new job created.
- Businesses that establish or transfer a regional or national headquarters are eligible to receive a $500 to $2,000 tax credit for each new job created.
National or Regional Headquarters Incentive
(§27-65-101)
Out-of-state businesses that establish or transfer a national or regional headquarters to Mississippi are eligible for sales and use tax credits, provided that a minimum of 35 headquarters jobs are created and maintained for five years. The Mississippi State Tax Commission makes all determinations of whether jobs qualify as headquarters positions. This incentive is not available for national or regional sales offices. A full exemption of sales and use tax is available on machinery and equipment purchases. The exemption is valid from the beginning date that purchases are made through three months after initial start up. Component building materials purchased directly by the eligible company are not subject to the contractor's tax and can be exempted from sales/use tax. To qualify for this exemption, the component building materials must be excluded from the contract and must meet the criteria of being sold to, billed to, and paid for directly by the company and not the contractor. The labor portion of the contract remains subject to the 3.5% contractor's tax. This exemption does not cover tagged vehicles, ongoing expenses, or supply items.
Research and Development Jobs Credit
(§ 57-73-21)
An income tax credit of $1,000 per full-time job is available to certain types of businesses that create and sustain new jobs requiring research and development skills. The following businesses qualify for this credit:
Manufacturers, Wholesalers, Processors, Research and Development
Distributors, Warehousers, Air and Transportation Maintenance facilities, Telecommunications companies, Data and information processing companies, Computer software development enterprises, Recreational facilities that impact tourism, Resort hotels having a minimum of 150 rooms, Movie industry, and Technology intensive facilities.
This credit can be in addition to the jobs credit, is allowed throughout the state, and is available for five years. Unused credits can be carried forward for up to five years.
Qualified positions must require a Bachelor's degree in a scientific or technical field and be compensated at a professional level. Examples of professions qualifying for the research and development credit are engineers and chemists. The Mississippi State Tax Commission will determine the eligibility of all positions requesting qualification.
Please contact the Mississippi State Tax Commission for more information, including details about sales tax relief for purchases of raw materials, construction materials, and machinery used in the manufacturing process.
Location-Specific Tax Credits
Work Opportunity Tax Credit (WOTC)
Businesses that hire employees from groups that have high unemployment rates or other special employment needs, including people ages 18 to 24 who live in an enterprise community, can receive a tax credit of up to $2,400 against federal taxes for each new employee.
For more information, contact Mr. Franklyn Tate, City of Jackson—Office of Economic Development at 601.960.1638.
Renewal Community Employment Credit
Businesses located in the portion of Hinds County that is part of the federally designated Renewal Community are eligible for up to $1,500 for every existing employee and new hire who lives and works in the Renewal Community. This credit is available from January 1, 2002 to December 31, 2009.
www.ezec.gov
Foreign Trade Zones
In Hinds County, Hawkins Field Industrial Center and the Northwest Industrial Park are subzones of Foreign Trade Zone #158. These zones allow imports to enter the United States without custom duties and offer many other advantages that reduce the cost of tariffs involved with shipping products worldwide. Because Zone #158 is a General Purpose Zone, the application process is shortened significantly
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