Mississippi Payroll Taxes and Withholding Guide (2026)

What Makes Mississippi Payroll Different

Federal payroll tax is the same in every state. What changes from one state to the next is the second layer: state income tax withholding, employer unemployment taxes, and any employee social-insurance contributions. Mississippi sits at the simpler end of that range. Its income tax is a flat rate above a $10,000 zero bracket, and it deducts nothing else from employees: no state disability, no paid family leave, and no employee unemployment.

Two features set Mississippi apart from a plain flat-tax state. First, the $10,000 zero bracket means the first $10,000 of taxable income is never taxed, on top of the standard deduction and exemptions, so the effective rate is always below the headline. Second, the rate is being phased out under the Build Up Mississippi Act, so it falls every couple of years toward full repeal. An Mississippi pay stub still has fewer lines than a New Jersey or California stub: federal taxes and the state income tax, and that is it. The federal baseline behind all of this is explained in the how payroll taxes work guide.

Employee Withholding Overview in Mississippi

A Mississippi employee sees federal taxes and a single flat state income tax line. There is no local wage tax and no state social-insurance deduction. The deductions fall into two groups: federal taxes and Mississippi income tax.

The federal lines work identically to any other state. For Social Security, the 2026 wage base is $184,500, after which Social Security stops for the year. Medicare has no cap. The only state line is the Mississippi income tax. There is no employee unemployment, disability, or family leave line, because Mississippi does not levy those on workers.

How Is Mississippi Income Tax Withheld?

Mississippi has a flat income tax withheld by the Computer Payroll Accounting method, which applies to every employee. Employers annualize wages, subtract the Form 89-350 standard deduction and exemptions to get Mississippi taxable income, then apply a two-step schedule: 0% on the first $10,000 and the flat rate above it. The 2026 figures are shown; for 2025 the rate was 4.4%.

Mississippi does not use filing status to widen a bracket schedule; the same two-step rate applies to everyone, and only the Form 89-350 marital-status code (which sets the standard deduction) and the exemption count change the result. The federal Form W-4 sets federal withholding, covered in the W-4 withholding explained guide, while Form 89-350 sets the Mississippi deduction and exemptions. Because withholding is an estimate, the final Mississippi tax is settled on Form 80-105.

The Mississippi Withholding Formula and Form 89-350

Form 89-350, the Employee's Withholding Exemption Certificate, is Mississippi's version of the federal W-4, but it works on dollar exemptions rather than allowances. It sets two things: your standard deduction (by marital-status code) and your total exemption (a dollar amount).

The Formula

The Computer Payroll Accounting method annualizes your wages, subtracts the standard deduction plus the exemption to get taxable income, then applies 0% to the first $10,000 and the flat rate to the rest. In symbols: TI = annual wages − (exemption + standard deduction); annual tax = flat rate × (TI − $10,000), floored at $0; then divided by pay periods and rounded to whole dollars.

Exemptions Are Real Wage Exemptions

Each dependent adds a $1,500 exemption (Line 5), and each age-65 or blind box adds another $1,500 (Line 4). Unlike a credit state such as Arkansas, where an exemption is only a small tax credit, a Mississippi exemption reduces taxable wages, so each $1,500 dependent exemption saves about $66 a year at the 4.4% rate. An employee with no Form 89-350 on file is withheld using zero exemption, which removes the personal and dependent exemptions but keeps the standard deduction, over-withholding a single worker by about $264 a year. The Mississippi paycheck calculator lets you set exemptions directly so you can see the effect.

The $10,000 Zero Bracket and the Phase-Out to Repeal

Two Mississippi features deserve their own explanation because they change the math and the trajectory of the tax.

The $10,000 Zero Bracket

After the standard deduction and exemptions come out, Mississippi taxes the first $10,000 of what remains at 0%. Only the amount above $10,000 is taxed at the flat rate. This is why a Mississippi paycheck's effective state rate is always well below the 4.0% (2026) or 4.4% (2025) headline: a single worker at $65,000 keeps a $6,000 exemption, a $2,300 deduction, and the $10,000 zero bracket ahead of the rate, so the effective rate lands closer to 3% of gross.

The Build Up Mississippi Act Phase-Out

Mississippi is one of a handful of states actively phasing out its income tax. The Build Up Mississippi Act (House Bill 1 of 2025) set the flat rate at 4.4% for 2025 and 4.0% for 2026, with further reductions scheduled through the end of the decade, contingent on state revenue growth, on a path toward full repeal. For payroll that means the withholding rate falls every couple of years, so a lower state line on next year's stub is the law working as intended, not a payroll error. The 2024 rate was 4.7%, the 2025 rate is 4.4%, and the 2026 rate is 4.0%.

Mississippi Deducts No Employee Disability, Family Leave, or Unemployment

This is where Mississippi is simpler than the high-tax states. Some states deduct social-insurance contributions from employee wages. Mississippi deducts none.

• No state disability insurance: Mississippi has no mandatory short-term disability payroll deduction, unlike California or New Jersey.
• No paid family leave payroll tax: Mississippi has not enacted a state-run paid family and medical leave program funded by employee payroll deductions.
• No employee unemployment tax: Unemployment insurance is funded entirely by employers through the Department of Employment Security. Workers pay nothing toward it, and no unemployment line appears on an employee stub.

The practical result is that the only state deduction a Mississippi employee sees is the income tax. That is why a Mississippi stub is shorter than a New Jersey stub, which carries three separate employee contribution lines on top of the income tax.

Employer Payroll Obligations in Mississippi

Mississippi employers carry the federal employer taxes plus the state unemployment contribution. The federal side, covered in the employer payroll tax obligations guide, includes the matching 6.2% Social Security and 1.45% Medicare plus Federal Unemployment Tax (FUTA). On top of that, Mississippi adds a state unemployment tax paid entirely by the employer.

Mississippi state unemployment tax is assessed on the first $14,000 of each employee's wages, and the rate depends on the employer's experience rating with the Department of Employment Security. New employers pay a 1.0% rate in their first year, rising to 1.1% and 1.2% over the next two years until they have enough history for an experience-based rate (roughly 0.2% to 5.4%). None of this is deducted from employee pay. The combined cost-to-hire can be modeled with the employer payroll tax calculator.

Mississippi Has No Local Wage Income Tax

Mississippi has no municipal or county wage income tax deducted from employees. A worker in Jackson, Gulfport, Southaven, Hattiesburg, or anywhere else in Mississippi pays the state income tax, but no city or county income tax line.

This is a meaningful difference for cross-border commuters. A worker arriving from a state with local wage taxes, such as Kentucky (occupational taxes) or Missouri (Kansas City and St. Louis earnings taxes), is used to a city or county income tax stacked on top of the state tax; there is no Mississippi equivalent. So a worker moving to Mississippi will not see a local wage line, and its absence is correct, not a payroll error. Mississippi also has no reciprocity agreements with any state, so a nonresident earning Mississippi wages is withheld on and files a Mississippi nonresident return, claiming a home-state credit to avoid double taxation.

Mississippi Supplemental Wage Withholding

Supplemental wages are payments outside regular salary: bonuses, commissions, overtime, sales awards, and back pay. Mississippi withholds income tax on supplemental wages, and an employer may either add the supplemental pay to regular wages and apply the Computer Payroll Accounting method, or apply the flat state rate to bonuses paid separately from regular wages.

• Mississippi income tax on supplemental wages: withheld by adding the supplemental pay to regular wages and applying the formula method, or by applying the flat state rate to a separate bonus payment.
• There are no Mississippi disability, family leave, or unemployment employee contributions to apply to supplemental pay, because Mississippi does not levy them.
• Federal income tax withholding on supplemental wages is a separate calculation set by the IRS, and Social Security and Medicare still apply under their own rules.

For the federal supplemental math on a bonus, use the Bonus Tax Calculator.

Mississippi Filing and Payment Frequency

Mississippi employers report and remit withheld income tax through the Department of Revenue's Taxpayer Access Point (TAP). Withholding is deposited and reported on a monthly or quarterly schedule that depends on the amount withheld, with an annual reconciliation and W-2 filing after year end. Employers filing 10 or more returns are required to file electronically through TAP. The federal deposit schedule is covered separately in the payroll tax deadlines guide.

State unemployment contributions are reported and paid separately to the Department of Employment Security on its own quarterly schedule. New employees must be reported to the Mississippi new hire reporting center shortly after the hire date.

How Take-Home Pay Works in Mississippi

The calculation sequence runs from gross pay down to net pay. Mississippi income tax starts from taxable wages after the standard deduction and exemptions and the $10,000 zero bracket, and there are no state social-insurance lines to add.

1. Start with gross wages for the pay period.
2. Apply federal income tax withholding using the Form W-4 and IRS Publication 15-T.
3. Annualize wages, subtract the Form 89-350 standard deduction and exemptions, tax the first $10,000 of the remainder at 0% and the rest at the flat rate (4.0% for 2026), and divide by pay periods for the Mississippi income tax.
4. Subtract Social Security (6.2%) and Medicare (1.45%) on FICA wages.
5. The remainder is net pay. There are no state disability, family leave, or unemployment deductions to subtract.

To see exact figures for a specific salary, Form 89-350 exemption count, and pay frequency, use the Mississippi paycheck calculator or the general take-home pay calculator for a full pre-tax benefits stack.

What Mississippi Employees Should Check on a Pay Stub

• Mississippi income tax line: Confirm MS income tax is withheld and reflects the $10,000 zero bracket and your Form 89-350 exemption, not the flat rate on your full wages.
• No employee contribution lines: There should be no state disability, family leave, or unemployment deduction. If you see one, question it, because Mississippi does not levy those on employees.
• No local tax line: Mississippi has no city or county income tax, so there should be no local wage line.
• FICA: Confirm Social Security at 6.2% (until $184,500 of wages for 2026) and Medicare at 1.45% with no cap.
• Form 89-350 on file: If your state line looks high, confirm your employer has a current 89-350; without one, Mississippi withholds at zero exemption.

What Mississippi Employers Should Verify Before Running Payroll

• State registration: Confirm active accounts for Mississippi income tax withholding with the Department of Revenue (TAP) and for unemployment tax with the Department of Employment Security, and check the annual MDES tax-rate notice.
• 89-350 on file: Collect a current Form 89-350 from each employee; without one, withhold using zero exemption.
• Current rate: Confirm the payroll system uses the current year's flat rate, 4.0% for 2026 pay (or 4.4% for 2025 pay), with the $10,000 zero bracket and the correct Form 89-350 standard deduction and exemptions.
• New hire reporting: Report each new worker to the Mississippi new hire reporting center.

Mississippi Payroll Quick Facts (2026)

Frequently Asked Questions