Mississippi Sales Tax Rate Rules Penalties and Filing

Understanding Mississippi’s sales tax requirements can be complex for businesses. With a statewide rate of 7% and varying local taxes, managing compliance demands attention to detail.

This guide explains Mississippi’s sales and use tax rates for 2025, outlines key exemptions, and provides practical steps to stay compliant. Whether launching a new business or refining your tax processes, this article will help you avoid penalties and manage obligations effectively.

What is the Sales Tax Rate in Mississippi?

As of 2025, Mississippi sales tax rate is 7%. However, local jurisdictions can add their taxes, varying total rates from 7% to 8%. For example, Tupelo has a local sales tax of 0.25%, and Jackson has a local sales tax of 1%.

Depending on the nexus type, businesses must collect sales tax from buyers in the state. Using the Mississippi sales tax calculator is recommended for the most accurate rates.

Mississippi Sales and Use Tax Overview

In Mississippi, the Mississippi Department of Revenue (DOR) oversees sales and use tax administration. If you own a business here, it’s essential to collect the appropriate taxes when selling taxable goods and services and remit them to the state.

Below is a breakdown of key aspects of the state’s sales tax system, including taxable items, exemptions, and general requirements to help you stay compliant.

Key Features of Mississippi Sales Tax

• State Sales Tax Rate: The general sales tax rate is set at 7%, which applies uniformly across the state.
• Nexus Requirements: Businesses must collect sales tax if they have either:
  • Physical Nexus: A physical presence in Mississippi, such as a business location or employees.
  • Economic Nexus: Sales exceeding $250,000 in the prior 12 months will trigger Mississippi economic nexus.

Also read: US Sales Tax Guide: Introduction, Nexus, and How to Calculate Rates

Taxable and Exempt Items

Most tangible personal property is subject to sales tax; however, several exemptions exist:

Taxable Items Include:

• Furniture
• Appliances
• Books
• Telecommunication services

Mississippi sales tax exemption applies to several key categories, including:

• Groceries
• Clothing priced under $100 per item
• Certain healthcare items and services
• Newspapers and magazines
• Shipping services (if itemized separately)

These Mississippi sales tax exemptions are designed to alleviate the tax burden on essential goods and services.

For a comprehensive list of Mississippi taxable and exempt items, it is recommended to refer to the Mississippi Department of Revenue’s guidelines and resources. This will help ensure compliance with current tax laws and optimize your understanding of which goods and services are subject to sales tax as of 2025.

When Do Businesses Need to Collect Sales Tax in Mississippi?

In Mississippi, businesses are required to collect sales tax when they establish a nexus in the state. Nexus refers to a significant connection between a company and a state, which obligates the company to collect and remit sales tax on sales made to customers in that state. Two primary types of nexus can trigger this obligation:

1. Physical Nexus

A business has a physical nexus in Mississippi if it has any of the following:

• An office or place of business within the state.
• Employees or agents present in Mississippi who service customers or solicit orders.
• Goods are stored in a warehouse or fulfilment centre located in Mississippi.
• Ownership of real or personal property in the state.
• Participation in trade shows or events within Mississippi.
• Delivery of goods or performance of services within Mississippi.

2. Economic Nexus

A business establishes a Mississippi economic nexus if its sales in the state exceed $250,000 in the prior 12-month period. This means that even businesses without a physical presence in Mississippi must collect sales tax once they reach this revenue threshold.

Once nexus is established, businesses must register for a sales tax permit, collect the appropriate sales tax on taxable transactions, and remit those taxes to the Mississippi Department of Revenue. Failure to comply can result in penalties and interest charges.

Also read: What is Sales Tax Nexus: Types, Rules, Thresholds, and What Constitutes It

Failure to Collect Mississippi Sales Tax

Non-compliance with Mississippi sales tax regulations can lead to significant financial and legal repercussions for businesses. Here’s an overview of the penalties and interest charges associated with non-compliance:

1. Penalties for Late Payment and Filing

• Late Filing Penalty: If a business fails to file its sales tax return by the due date, a penalty of 10% of the tax due or $50, whichever is greater, may be assessed for each return not filed on time.
• Late Payment Penalty: If a business fails to pay the sales tax by the due date, a penalty of 10% of the tax due may be assessed for each payment not made on time.

2. Interest Charges

In addition to penalties, interest accrues on any unpaid tax balance from the due date until the tax is paid in full. The interest rate is calculated at 1% per month on any portion of a month when the payment is past due and continues to accrue until all taxes, penalties, and interest are paid.

3. Underpayment Penalties

If a business underpays its sales tax due to negligence or failure to comply with tax laws, a penalty of 10% of the deficiency amount may be assessed.

4. Criminal Charges for Willful Evasion

Engaging in willful tax evasion is classified as a felony in Mississippi, punishable by fines up to $100,000 for individuals or $500,000 for corporations, along with potential imprisonment for up to 5 years.

5. Additional Compliance Penalties

Taxpayers who fail to comply with filing requirements or incorrectly submit returns, payments, or data may face penalties of up to $100 for each instance of non-compliance.

Also read: US Sales Tax Compliance Basics: Registration, Exemptions, and Filing Made Easy

To avoid these penalties and interest charges, businesses must understand and adhere to Mississippi’s sales tax laws. Regularly filing accurate returns and timely payments can help central compliance and prevent unnecessary financial burdens. For more information businesses can contact the Mississippi DOR at (601) 923-7700.

Mississippi Sales Tax for Out-of-State and Amazon FBA Program Sellers

In Mississippi, out-of-state sellers must adhere to specific sales tax collection requirements, including those participating in the Amazon FBA (Fulfillment by Amazon) program. Here’s an overview of when these sellers need to collect sales tax and the nexus implications.

1. Nexus Requirements

Out-of-state sellers must collect Mississippi sales tax if they establish a nexus in the state, which can be either physical or economic:

• Physical Nexus: This occurs when a seller has a tangible presence in Mississippi, such as an office, warehouse, or employee. Like participating in trade shows, a temporary presence can create a physical nexus.
• Economic Nexus: Effective July 1, 2018, remote sellers with annual Mississippi sales exceeding $250,000 are required to collect and remit sales tax. This includes all sales of tangible personal property or services delivered into the state.

2. Marketplace Facilitators

Marketplace facilitators, such as Amazon, are also subject to these rules. They must collect and remit sales tax on behalf of third-party sellers when their total sales exceed the $250,000 threshold. If you sell products through Amazon and your total sales through the platform exceed this amount, Amazon will handle the tax collection.

3. Sales Tax Collection Process

Once nexus is established:

• Sellers must register for a Mississippi sales tax permit.
• They collect the 7% sales tax on all taxable transactions.
• Sales tax must be remitted to the Mississippi Department of Revenue according to the required filing frequency.

4. Implications for Amazon FBA Sellers

For sellers using the Amazon FBA program:

• If your products are stored in Amazon’s warehouses located in Mississippi or if you have met the economic nexus threshold through your sales, you must comply with Mississippi sales tax regulations.
• This includes ensuring that Amazon collects and remits the appropriate sales tax on your behalf if you meet the criteria.

Understanding and complying with Mississippi’s sales tax requirements is crucial for out-of-state sellers and Amazon FBA participants to avoid potential penalties and ensure smooth business operations.

Registering for a Mississippi Seller’s Permit

To legally collect sales tax in Mississippi, businesses must obtain a sales tax permit from the Mississippi Department of Revenue (DOR). This permit is essential for any business selling taxable goods or services within the state.

Mississippi sales tax permit is required for businesses that:

• In-State Businesses: All in-state businesses with retail sales in Mississippi must register for a sales tax permit.
• Out-of-State Sellers: Out-of-state entities operating a business in Mississippi must register, collect, and remit sales taxes.
• Sales Representatives: Entities without a physical presence in Mississippi but represented by salespersons residing in the state who solicit or accept orders for merchandise delivered in Mississippi are liable for the collection of Mississippi Use Tax.

How to Register for a Sales Tax Permit

1. Online Registration via TAP
   • Access the Taxpayer Access Point (TAP): Visit the Mississippi DOR’s TAP website.
   • Create an Account: Click “Sign Up” and select “Register a New Taxpayer.”
   • Complete the Application: Provide necessary business information, including legal business name, physical address, and Federal Employer Identification Number (EIN).
2. Information Required
   • Business Details: Legal business name, physical address, and mailing address.
   • Ownership Information: For sole proprietors, use the Social Security Number; for corporations or LLCs, use the EIN.
   • Business Activity: The date business activities began or will begin, as well as projected monthly sales and products to be sold.

Note: There is no fee to apply for a Mississippi sales tax permit. Sales tax permits do not require renewal and remain valid as long as the business continues to operate. After completing your application through TAP, you should receive your permit in the mail within two weeks.

Also read: Sales Tax Permit: How to Register, Verify, and Why Your Business Needs It

How to Collect Sales Tax in Mississippi

To effectively manage sales tax obligations in Mississippi, businesses should understand the processes for collecting sales tax. Below is a detailed breakdown:

1. Determine Taxable Sales

Most tangible personal property and select services, such as telecommunications and repairs, are taxable. However, groceries, prescription drugs, and professional services may be exempt. Check Mississippi DOR guidelines for clarity.

2. Register for a Sales Tax Permit

Before collecting tax, businesses must register for a sales tax permit via the Mississippi Taxpayer Access Point (TAP). Required details include:

• Business structure (LLC, Sole Proprietorship, etc.)
• Federal Employer Identification Number (EIN)
• Estimated monthly sales

Registration is free, but failure to obtain a permit before taxable sales can result in penalties.

3. Collect the Appropriate Tax Rate

Mississippi’s statewide sales tax rate is 7%, with some local jurisdictions imposing additional taxes, particularly in industries like hospitality and entertainment. Businesses must stay updated on rate changes issued by the Mississippi DOR.

4. Maintain Accurate Records

Keep records of taxable and non-taxable sales, the amount of tax collected, and sales tax exemption certificates. Proper documentation helps with sales tax returns and potential audits.

Businesses can file online via TAP to ensure timely compliance.

Sales tax returns can be filed online through the Mississippi Taxpayer Access Point (TAP). Failure to file or remit taxes on time may result in penalties and interest charges.

Filing Sales Tax Returns in Mississippi

Filing sales tax returns in Mississippi is essential for businesses that collect sales tax. Understanding the filing process, deadlines, and payment methods ensures compliance with state regulations.

Below is a step-by-step guide on how to file sales tax returns in Mississippi.

Filing Steps for Mississippi Sales Tax Returns

Filing Mississippi sales tax returns involves the following steps:

1. Log in to the Mississippi Taxpayer Access Point (TAP): Visit the Mississippi Department of Revenue’s TAP system and sign in to your account.
2. Select Sales and Use Tax: Choose the appropriate tax type and the correct filing period for your return.
3. Enter Sales Data: Report total gross sales, taxable sales, and any applicable exemptions or deductions.
4. Review and Verify: Double-check all entered data to ensure accuracy before submission.
5. Submit the Return: Electronically file the sales tax return through TAP before the due date to avoid penalties.
6. Make Payment: Pay the owed sales tax via ACH debit, credit card, or check. Payments can be made through TAP.

How to Pay Your Mississippi Sales Tax

After filing your Mississippi sales tax return, making timely payments is essential to avoid penalties. The Mississippi Department of Revenue (DOR) provides multiple payment options for businesses:

1. Electronic Funds Transfer (EFT)

Businesses can use EFT to transfer sales tax payments directly from their bank accounts. This method ensures quick and secure payment processing. Payments can be initiated through the Mississippi Taxpayer Access Point (TAP).

2. E-Check

Like a traditional check, an e-check allows businesses to pay electronically by entering their bank routing and account numbers in the TAP portal. The amount is debited directly from the business’s bank account.

3. Credit or Debit Card

Businesses can make sales tax payments using a credit or debit card through the TAP system. Note that processing fees may apply when using this payment method.

4. ACH Credit

Businesses that prefer to initiate payments through their financial institutions can use the ACH credit option. Following the Mississippi Department of Revenue’s instructions ensures accurate processing.

To ensure seamless tax compliance and avoid unnecessary penalties, businesses can simplify their sales tax management with Commenda. Automate tax calculations, streamline filings and stay on top of deadlines effortlessly. Get started with Commenda today!

Tax-Exempt Customers in Mississippi

Specific customers in Mississippi qualify for sales tax exemptions, meaning they are not required to pay sales tax on particular purchases. These exemptions apply to various entities, including government agencies, nonprofit organizations, and certain purchases made for resale. Here are the most common categories of tax-exempt customers in Mississippi:

1. Government Entities

Federal, state, and local government agencies are exempt from Mississippi sales tax when making purchases for official government use. This includes items used by government employees or agencies to perform governmental functions.

2. Nonprofit Organizations

Qualifying nonprofit organizations that have received a sales tax exemption certificate from the Mississippi Department of Revenue are eligible for tax-free purchases. This typically includes charitable organizations, educational institutions, and certain healthcare entities.

3. Resale Purchases

Businesses that purchase goods for resale are exempt from paying sales tax at the time of purchase. To claim this exemption, companies must present a valid resale certificate to the seller at the time of sale.

4. Religious Organizations

Specific religious organizations may be exempt from sales tax on spiritual purchases. This includes church supplies, equipment for religious ceremonies, and books.

5. Educational Institutions

Sales to accredited public and private educational institutions may be exempt from sales tax, particularly for instructional activities or research items.

Businesses must maintain accurate records of all tax-exempt sales and ensure that the exemption certificates are up-to-date and valid. For more detailed information on tax exemptions in Mississippi, businesses can consult the Mississippi Department of Revenue’s guidelines.

Using Sales Tax Automation Tools

Managing Mississippi sales tax manually can be time-consuming and prone to errors, especially with varying tax rates and filing requirements. Whether you operate a small business or manage high-volume sales, automation tools can help simplify tax compliance and reduce the risk of miscalculations.

Benefits of Using Commenda:

• Real-Time Tax Calculation: Automatically apply the correct 7% Mississippi state tax and any applicable local taxes at checkout.
• Seamless Filing & Remittance: Generate accurate tax reports and submit payments on time.
• Audit Protection: Keep well-organized digital records for tax audits and compliance checks.
• Multi-State Compliance: Commenda helps manage sales tax obligations across multiple states if your business operates beyond Mississippi.

Mississippi Sales Tax Compliance Checklist

To ensure compliance with Mississippi sales tax regulations, businesses should follow this sales tax compliance checklist:

1. Determine Nexus: Assess whether your business has a physical nexus (office, warehouse, employees) or an economic nexus (sales exceeding $250,000 annually) in Mississippi.
2. Register for a Seller’s Permit: Obtain a Mississippi sales tax permit through the Mississippi Department of Revenue (DOR) via the Taxpayer Access Point (TAP) system.
3. Implement Sales Tax Automation Tools: Use Commenda to automate tax calculations, manage exemptions, and simplify filing.
4. Collect Sales Tax: Charge the correct 7% Mississippi state tax, plus any applicable local sales taxes, on all taxable transactions.
5. File Sales Tax Returns: Submit sales tax returns based on your filing frequency (monthly, quarterly, or annually) through TAP.
6. Remit Payments: Ensure timely tax payments to the Mississippi DOR to avoid penalties and interest charges.
7. Maintain Accurate Records: Keep detailed documentation of all sales, exemption certificates, and tax filings for at least three years in case of an audit.

By following these steps, businesses can stay compliant and avoid costly fines. Want a hassle-free way to manage Mississippi sales tax? Book your free demo with Commenda here to learn more.

How Should I Prepare for Mississippi Sales Tax Audits and Appeals?

Preparing for a Mississippi sales tax audit requires maintaining accurate records, understanding audit triggers, and knowing the appeals process. Follow these steps to ensure compliance and avoid penalties:

1. Understand Audit Triggers

Mississippi businesses may be audited for various reasons, including:

• High transaction volumes or frequent tax adjustments.
• Discrepancies between reported sales and tax collected.
• Missing or invalid exemption certificates.
• Late or inconsistent tax filings.

Regularly reviewing your sales tax records can help you identify potential red flags before an audit is triggered.

2. Maintain Comprehensive Documentation

Auditors will require detailed sales tax records, including:

• Sales invoices and receipts.
• Exemption certificates for tax-exempt sales.
• Purchase invoices and business expense records.
• Filed tax returns and payment confirmations.

Keeping accurate records for at least three years is recommended to ensure compliance with the Mississippi Department of Revenue (DOR) requirements.

3. Conduct Internal Reviews

Performing periodic self-audits can help identify errors in sales tax calculations and prevent potential penalties. Using sales tax automation tools like Commenda can streamline this process, ensuring accurate tax reporting and compliance.

4. Prepare for the Audit Process

If notified of an audit by the Mississippi DOR, be ready to:

• Provide access to relevant sales and financial documents.
• Explain business operations and sales tax collection practices.
• Respond promptly to auditor requests and inquiries.

5. Understand the Appeals Process

If you disagree with the audit findings, you have the right to appeal the decision:

• File an appeal within 60 days of receiving the audit determination.
• The Mississippi Board of Tax Appeals reviews the case.
• If unresolved, you may appeal to the Chancery Court for further review.

Mississippi Sales Tax Rates by City

In Mississippi, the state imposes a base sales tax rate of 7%. Additionally, certain cities levy local sales taxes, varying total tax rates across the state. Below is a table highlighting the sales tax rates for ten notable Mississippi cities:

Note: The total sales tax rate includes the state base rate of 7% plus any applicable local taxes.

With Commenda, you can streamline the entire Mississippi sales tax process—from accurate tax calculations to automated filings. This eliminates the hassle of manually tracking tax rates and deadlines, ensuring you remain compliant with the Mississippi Department of Revenue.

Avoid costly mistakes and late fees—get started with Commenda and automate your Mississippi sales tax compliance today!

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FAQs

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