What Is Mississippi Payroll Tax?
Mississippi payroll tax refers to the state payroll taxes that employers must withhold from employee wages or pay directly to state agencies. These taxes fund unemployment benefits, workforce development programs, and Mississippi's individual income tax system.
Mississippi payroll tax system is relatively straightforward compared with states that impose separate city or county income taxes. Employers generally manage unemployment insurance and the applicable Workforce Investment and Training contribution through the Mississippi Department of Employment Security, while state income tax withholding is administered by the Mississippi Department of Revenue. Mississippi cities and counties do not generally impose a separate local income tax on employee wages.
Most Mississippi employers are responsible for the following payroll tax requirements:
- Unemployment Insurance (UI), administered by the Mississippi Department of Employment Security
- Mississippi Individual Income Tax withholding, administered by the Department of Revenue using the state's withholding tables and employee Form 89-350
- Workforce Investment and Training contribution, when applicable as part of the employer's unemployment tax account
Mississippi Payroll Taxes at a Glance
| Payroll Tax | Paid By | Purpose |
|---|---|---|
| Unemployment Insurance (UI) | Employer | Provides temporary income for eligible unemployed workers |
| Individual Income Tax | Employee (withheld by employer) | State income tax withheld from employee wages |
| Workforce Investment and Training Contribution | Employer | Supports workforce training and employment programs in Mississippi |
Understanding who pays each tax and recognizing that Mississippi does not generally impose separate city or county income tax withholding helps employers avoid unnecessary local payroll registrations while correctly accounting for employer-funded UI and workforce contributions.
Mississippi Employer Payroll Tax Responsibilities
Every employer with workers in Mississippi has payroll tax responsibilities beyond simply issuing paychecks. Depending on your business, you'll generally need to:
- Register your business with the Mississippi Department of Employment Security and the Mississippi Department of Revenue.
- Obtain a Mississippi unemployment insurance employer account and state withholding tax account.
- Collect a completed Mississippi Employee's Withholding Exemption Certificate, Form 89-350, from each employee.
- Withhold Mississippi individual income tax from taxable employee wages.
- Pay employer UI contributions and any applicable Workforce Investment and Training contribution.
- File quarterly UI wage and tax reports.
- File Mississippi withholding returns and remit withheld taxes on the assigned monthly or quarterly schedule.
- Submit annual employee W-2 information to the Mississippi Department of Revenue.
- Report every new hire and rehire to the Mississippi State Directory of New Hires within 15 days.
- Maintain payroll records for state compliance.
Many businesses use payroll software with built-in Mississippi tax tables, since employers must apply employee exemptions, filing status, pay frequency, employer-specific UI rates, and applicable workforce contributions correctly for each payroll period.
Types of Mississippi Payroll Taxes
Unemployment Insurance (UI)
Unemployment Insurance is an employer-funded payroll tax administered by the Mississippi Department of Employment Security that provides temporary financial assistance to eligible workers who lose their jobs through no fault of their own.
Employers pay this tax directly it is never deducted from employee paychecks.
Mississippi assigns start-up employers a phased rate during their first years of liability. Once an employer has sufficient unemployment experience, it may receive a modified rate based on benefit charges, taxable payroll, and the statewide general experience ratio.
Key Facts
- Paid entirely by employers Mississippi has no employee UI contribution
- Calculated on the first $14,000 of each employee's wages for 2026
- Start-up employers pay 1.00% during the first year of liability
- Start-up employers pay 1.10% during the second year of liability
- Start-up employers pay 1.20% during the third and subsequent years until eligible for a modified rate
- Modified employer rates generally range from 0.0% to 5.4%, before any applicable Workforce Investment and Training contribution
- Employers that acquire an existing liable business may become eligible for a modified rate immediately
- Most Mississippi employers receive a federal FUTA tax credit of up to 5.4% for timely state UI payment, bringing the effective FUTA rate down to about 0.6%
- Must be reported quarterly through the Mississippi Department of Employment Security's online employer tax system
Mississippi Individual Income Tax Withholding
Mississippi imposes an individual income tax rate of 4% on taxable income exceeding $10,000 for the 2026 tax year. Employers calculate payroll withholding using the official Mississippi withholding tables, which account for the employee's wages, pay frequency, filing status, standard deduction, and exemptions reported on Form 89-350.
Employers are responsible for:
- Withholding Mississippi income tax from taxable wages using current Department of Revenue withholding tables
- Collecting Form 89-350 from new employees and employees who change their withholding elections
- Reporting withholding to the Mississippi Department of Revenue
- Depositing withheld taxes on a monthly or quarterly schedule, depending on the employer's assigned filing frequency
- Filing withholding returns through the Taxpayer Access Point, commonly known as TAP
- Submitting required employee W-2 information to the Department of Revenue by January 31
Mississippi withholding generally applies to residents receiving taxable wages and to nonresidents performing services in Mississippi. A nonresident employee may not require withholding when expected Mississippi wages remain below the applicable standard deduction threshold, but employers should review current Department of Revenue guidance before applying an exemption.
Workforce Investment and Training Contribution
Mississippi employers may also be assigned a Workforce Investment and Training contribution as part of their unemployment tax obligations. This employer-funded contribution supports workforce training, employment services, and skills-development programs throughout the state.
Key rules employers need to know:
- The contribution is paid by employers and is not deducted from employee wages
- It may apply in addition to the employer's regular unemployment insurance contribution rate
- Published UI rate ranges do not necessarily include the Workforce Investment and Training contribution
- The applicable contribution rate is identified through the employer's unemployment tax account or annual rate information
- The contribution generally applies to the same taxable wage base used for unemployment insurance
- Employers should not assume that their regular UI percentage represents their complete state unemployment-related liability
- Payments and reporting are handled through the Mississippi Department of Employment Security
- Employers should review their current rate notice before configuring payroll for each calendar year
Because Mississippi's published start-up and modified UI rates may exclude the Workforce Investment and Training contribution, employers should use the complete rate assigned by the Mississippi Department of Employment Security rather than relying solely on the general UI rate range.
Which Payroll Taxes Are Paid by Employers vs Employees?
| Tax | Employer Pays | Employee Pays |
|---|---|---|
| Unemployment Insurance (UI) | YES | NO |
| Individual Income Tax | NO | Withheld from wages using state withholding tables |
| Workforce Investment and Training Contribution | YES, when applicable | NO |
Mississippi places the unemployment insurance and workforce-training contribution burden on employers, while state individual income tax is withheld from employee wages.
Mississippi Payroll Tax Rates for Employers
Understanding current Mississippi payroll tax rates is essential for calculating payroll accurately. Because experienced-employer UI rates are assigned individually and may be supplemented by a Workforce Investment and Training contribution, employers should review their current rate information before processing payroll.
Mississippi Payroll Tax Rates at a Glance
| Payroll Tax | Who Pays | General Rate | Taxable Wage Base |
|---|---|---|---|
| Unemployment Insurance (UI) | Employer | Start-up employers: 1.00% in the first year, 1.10% in the second year, and 1.20% in the third and subsequent years until experience-rated. Modified rates generally range from 0.0%–5.4%, excluding applicable workforce contributions | $14,000 for 2026 |
| Individual Income Tax | Employee | 4% on taxable income exceeding $10,000 for tax year 2026; payroll withholding is calculated using official state tables and Form 89-350 information | Applies to taxable Mississippi wages, with no UI-style annual wage cap |
| Workforce Investment and Training Contribution | Employer | Employer-specific contribution may apply in addition to the regular UI rate | Generally follows the $14,000 UI taxable wage base |
According to the Mississippi Department of Employment Security's official employer guidance, start-up unemployment tax rates begin at 1.00%, increase to 1.10% in the second year, and increase to 1.20% in the third and subsequent years until the employer qualifies for a modified rate. Modified rates generally range from 0.0% to 5.4%, and unemployment contributions apply to the first $14,000 paid to each employee during the year.
Instead of relying on a general statewide estimate, employers should review their current unemployment rate information, confirm whether a Workforce Investment and Training contribution applies, and make sure payroll software reflects Mississippi's 2026 withholding tables.
Understanding Taxable Wages
Not every Mississippi payroll tax applies to wages the same way. Depending on the tax involved, taxable wages may include:
- Hourly wages
- Salaries
- Bonuses
- Overtime pay
- Commissions
- Certain taxable fringe benefits
UI tax and the applicable Workforce Investment and Training contribution generally apply only to the first $14,000 of each employee's annual wages. State income tax withholding generally applies more broadly to taxable Mississippi wages without the same wage base cap. Understanding which wage rules apply to each obligation helps reduce calculation errors.
Mississippi Payroll Tax Filing Deadlines
Meeting payroll tax deadlines is just as important as calculating taxes correctly. Late filings or payments can lead to penalties and interest charges.
Unemployment Insurance (Quarterly Wage Report)
| Reporting Quarter | Filing Deadline |
|---|---|
| January – March | April 30 |
| April – June | July 31 |
| July – September | October 31 |
| October – December | January 31 |
State Income Tax Withholding
Mississippi withholding tax returns and payments are filed monthly or quarterly, depending on the employer's assigned filing status. Returns are generally due by the 15th day of the month following the applicable monthly or quarterly reporting period.
Workforce Investment and Training Contribution
The Workforce Investment and Training contribution is generally reported and paid with the employer's quarterly unemployment insurance filing through the Mississippi Department of Employment Security. Employers should use the complete contribution rate associated with their account when calculating the quarterly amount due.
If a deadline falls on a weekend or legal holiday, it generally moves to the next business day. Because Mississippi withholding returns follow a different schedule from quarterly UI reports, employers should track each obligation independently.
How to Register for Mississippi Payroll Taxes
Before paying employees, businesses typically need to register with the Mississippi Department of Employment Security and the Mississippi Department of Revenue.
State registration: Employers register for a Mississippi unemployment insurance account through the Mississippi Department of Employment Security and apply for a state withholding tax account through the Mississippi Department of Revenue's Taxpayer Access Point.
Local registration: Mississippi cities and counties do not generally impose a separate local income tax on employee wages, so employers normally do not need to register with local revenue offices for payroll withholding. Separate municipal business licenses, privilege taxes, or other local business requirements may still apply.
During registration, you'll generally need information such as:
- Legal business name
- Federal Employer Identification Number (EIN)
- Business entity type
- Business address and all Mississippi work locations
- Owner or responsible party information
- Date employees first performed services in Mississippi
- Estimated payroll information
How to File Mississippi Payroll Taxes
Filing payroll taxes in Mississippi involves managing unemployment insurance, workforce contributions, and state income tax withholding obligations in parallel. A typical filing process includes:
Step 1: Calculate Employee Wages
Determine each employee's gross wages, including regular pay, overtime, bonuses, commissions, and other taxable compensation.
Step 2: Determine Applicable Local Jurisdictions
Confirm where each employee physically performs services and whether employment is localized in Mississippi. Mississippi does not generally impose local wage withholding, but the employee's work location can determine whether Mississippi withholding and unemployment insurance rules apply.
Step 3: Calculate Payroll Taxes
Determine your employer UI contribution and applicable Workforce Investment and Training contribution using your current account rate, and calculate employee income tax withholding using Form 89-350 and the current Mississippi withholding tables.
Step 4: Withhold Employee Taxes
Deduct Mississippi individual income tax from each paycheck when the wages are subject to state withholding. Do not deduct unemployment insurance or workforce contributions from employee wages.
Step 5: Pay Employer Contributions and Remit Withholding
Pay employer UI and applicable Workforce Investment and Training contributions through the Mississippi Department of Employment Security's employer system. Remit state income tax withholding through the Mississippi Department of Revenue's Taxpayer Access Point.
Step 6: File Payroll Tax Returns
Submit quarterly UI wage and tax reports, monthly or quarterly Mississippi withholding returns according to the assigned schedule, and required annual W-2 information through the applicable state systems.
Step 7: Maintain Payroll Records
Keep detailed payroll records, employee Form 89-350 certificates, unemployment rate information, wage records, filed returns, and payment confirmations in case of future audits or compliance reviews.
Following a consistent payroll process helps reduce mistakes and makes year-end reporting significantly easier.
Frequently Asked Questions
Who is required to pay Mississippi payroll taxes?
Most businesses that hire employees performing services in Mississippi are required to register with the Mississippi Department of Employment Security and the Mississippi Department of Revenue. Their responsibilities may include paying employer UI and workforce contributions, withholding state income tax, filing payroll returns, reporting employee wages, and maintaining payroll records.
What payroll taxes are employers responsible for in Mississippi?
Mississippi employers generally have responsibilities related to unemployment insurance, the applicable Workforce Investment and Training contribution, and state individual income tax withholding. UI and workforce contributions are employer-paid, while income tax is withheld from employee wages.
How often do employers file Mississippi payroll tax returns?
Unemployment insurance and applicable workforce contributions are reported quarterly. Mississippi income tax withholding returns are filed monthly or quarterly depending on the employer's assigned filing frequency, with returns generally due by the 15th day following the reporting period.
How do I register for Mississippi payroll taxes?
Employers register for unemployment insurance through the Mississippi Department of Employment Security and apply for a withholding tax account through the Mississippi Department of Revenue's Taxpayer Access Point.
What happens if payroll taxes are filed late?
Late filings or payments may result in penalties, interest charges, collection action, or other compliance issues. Delinquent unemployment contributions may also affect an employer's federal FUTA credit. Filing accurately and on time helps avoid unnecessary costs.
Does Mississippi payroll tax apply to remote employees?
Yes. An employee who physically performs services from a Mississippi location may create Mississippi withholding and unemployment insurance obligations even when the employer is located in another state. Employers should review where the employee's services are localized and whether the wages are subject to Mississippi income tax.
Are Mississippi payroll tax rates the same every year?
Not always. Mississippi employer-specific UI rate, statewide experience factors, Workforce Investment and Training contribution, income tax rate, withholding tables, and filing requirements can change. Employers should review current Department of Employment Security and Department of Revenue guidance before processing payroll each year.
Can payroll software calculate Mississippi payroll taxes automatically?
Many payroll platforms automatically calculate Mississippi UI contributions, workforce assessments, and state income tax withholding, apply the appropriate wage base and withholding tables, and help employers meet filing deadlines. Employers are still responsible for ensuring employee information, Form 89-350 elections, work locations, and assigned employer contribution rates are accurate and up to date.
Disclaimer
This article is for general informational purposes only and doesn't constitute legal, tax, or accounting advice. Payroll tax rates, wage bases, withholding tables, workforce contributions, filing requirements, and payment schedules can change. Consult a qualified CPA or tax professional for guidance specific to your business.
