M&A Advisory in Mississippi

Under the Build-Up Mississippi Act (HB 531, 2022) and HB 1 (signed March 27, 2025), Mississippi imposes a flat 4.4% individual income tax in 2025 on income over $10,000, dropping to 4.0% in 2026, then declining 0.25% annually to 3.0% by 2030 with a full-repeal trigger if revenue benchmarks are met. For sellers weighing closing-year timing, moving a close from January 2025 to calendar year 2026 saves 0.4% on the full gain — on a $15M sale, that is $60,000 in state tax savings from timing alone.

Mississippi sellers can completely exclude gain from the sale of authorized shares in Mississippi-domiciled corporations, partnerships, and LLC interests held more than one year — no $50M asset cap, no qualified-trade test, no employment or payroll threshold. Excluded gain must be reduced by losses from similar transactions in the year of sale and two years preceding/subsequent. This is effectively a state-level §1202 exclusion that Mississippi sellers should structure toward before market launch. On a $15M gain, the exclusion saves $660,000 (at 4.4%) or $600,000 (at 4.0%) compared to full taxation.

Mississippi's corporate franchise tax is mid-phase-out under SB 2858 (2016): $0.75/$1,000 of capital over $100,000 for 2025, $0.50 in 2026, $0.25 in 2027, and fully repealed January 1, 2028. For capital-intensive manufacturing sellers, the franchise liability decreases each year, modestly improving post-close economics for buyers retaining the Mississippi entity structure. Combined with permanent full equipment expensing (one of only two states offering this), Mississippi's capital-goods economics are among the most favorable in the Southeast.

Mississippi imposes a 7% state sales/use tax on tangible personal property transfers. Miss. Code §27-65-55 imposes broad successor liability: the tax is a lien on seller property, the seller must file a final return within 10 days of sale, and the purchaser must withhold sufficient purchase price until the seller produces a DOR clearance receipt. 10%-or-more owners with fiscal-management responsibility are personally liable for unpaid corporate sales tax — creating escrow obligations of 5-10% of purchase price until clearance is issued, typically within 30-60 days post-closing.

Mississippi is one of only four non-conforming states (with Alabama, California, and Pennsylvania). A seller excluding 100% of up to $15M of QSBS gain federally under post-OBBBA rules still pays 4.4%/4.0% Mississippi tax on the full gain — roughly $660K/$600K on a $15M exit. The statutory workaround is §27-7-9(f)(10): for Mississippi-domiciled corporations with >1-year holding period, the exclusion is uncapped and achieves the same result. Sellers must confirm entity domicile before relying on either provision.

No Mississippi estate tax return has been required for decedents dying on or after January 1, 2005. Mississippi imposes no inheritance tax and no gift tax — a substantial advantage for family-business succession planning and for multigenerational sellers transferring partial interests to family members through GRATs, IDGTs, or family LPs in the two to three years preceding a transaction. Only the federal regime applies ($13.99M exemption in 2025; $15M in 2026 under OBBBA).