TAXES & INCENTIVES
UNLOCKING
PROSPERITY
The city’s pro-business environment is complemented by favorable tax structures, which include low corporate income tax rates and various state tax credits. In addition to these financial advantages, Hattiesburg also benefits from programs designed to support economic development and entrepreneurship.
TAX OVERVIEW
A franchise tax is imposed on corporations for the privilege of doing business in the State of Mississippi. Franchise tax is due annually as long as the corporation remains incorporated, domesticated, or continues to do business in Mississippi. Most corporations engaged in business in Mississippi are subject to a franchise tax of $2.50 per $1,000 of capital invested in Mississippi.
State of Mississippi has a sales tax rate of 7%. In addition to the 7% sales tax rate, the City of Hattiesburg has levied the following sales tax on restaurants and hotels and motels:
– 1% Park & Recreation
– 2% Convention Commission
– 1% Park & Recreation
– 2% Tourism Commission (Visit Hattiesburg)
A franchise tax is imposed on corporations for the privilege of doing business in the State of Mississippi. Franchise tax is due annually as long as the corporation remains incorporated, domesticated, or continues to do business in Mississippi. Most corporations engaged in business in Mississippi are subject to a franchise tax of $2.50 per $1,000 of capital invested in Mississippi.
State of Mississippi has a sales tax rate of 7%. In addition to the 7% sales tax rate, the City of Hattiesburg has levied the following sales tax on restaurants and hotels and motels:
– 1% Park & Recreation
– 2% Convention Commission
– 1% Park & Recreation
– 2% Tourism Commission (Visit Hattiesburg)
TAX INCENTIVES
The Façade Grant Improvement Program is focused on supporting the growth and revitalization of existing commercial properties in Hattiesburg’s historic conservation district. The program will award funds to approved downtown properties to further revitalize building exteriors while aiming to attract potential investors and entrepreneurs looking to locate or expand a business in the downtown area.
For projects with a capital investment of at least $60 million, local authorities can grant a fee to be paid in lieu of property tax on all real and personal property for up to 10 years.
-A fee in lieu of taxes is available at the discretion of local authorities for projects involving an investment of at least $60 million.
-The value of the fee-in-lieu exemption depends on the millage rates for the site and the project’s expected investment in land, buildings, and equipment.
-A fee in lieu of property tax can cover all taxes assessed, but the fee cannot be less than 1/3 of the standard property tax levy.
-While a fee-in-lieu agreement can be in place for up to 30 years (the term is determined at the discretion of local authorities), no particular parcel of land, real property improvement or item of personal property can be subject to an exemption for more than 10 years.
A freeport warehouse exemption is available on finished goods inventory destined for shipment outside the state.
-A freeport warehouse exemption is available at the discretion of local authorities.
-A freeport warehouse exemption can be granted in perpetuity and can be on the
total millage amount, including school taxes.
-The value of the exemption would depend on the value of the company’s finished goods inventory at year-end and how much of that inventory was destined for shipment outside the state.
The company must apply to local authorities for a freeport warehouse license and must submit an inventory report to the county tax assessor each year to be able to receive this exemption.
Numerous incentives for business choosing to locate or expand in downtown Hattiesburg. Both a 7-year property tax exemption and a 10-year property tax exemption is available, and all exemptions must be approved by the City of Hattiesburg and Forrest County.
Hattiesburg Business Resources
MFLEX is a one-of-a-kind tax incentive plan where the credit is calculated on a simple formula factoring planned capital investment, number of new jobs and annual payroll. There is only one application and one approval for a universal credit that can be used to offset the corporate income tax, franchise tax, sales and use tax, and the payroll withholding tax. MFLEX credits can be used over 10 years and requires annual company reporting. Here is the link to the MFLEX brochure.
Eligibility: Designed for any business entity that creates at least 10 new jobs paying 75% of the state or average wage, and/or invest $2.5 million in qualified capital expenditures.
Eligible business types include manufacturers, warehouse and/or distribution businesses, research, and development facilities, regional or national headquarters, air transportation and/or maintenance facilities, data and information processing centers, technology-intensive enterprises, telecommunications business and data centers.
Administered through AccelerateMS, Mississippi Works offers financial support for on-the-job training that includes wage reimbursement program for new and upskilling employees. MS Works also offers f unding to support training initiatives for new and expanding industry such as OJT, college delivered training, vendor and 3rd party training.
– Recruitment and Job Referral Assistance via the WIN Job Center
– Applicant Assessment and Testing via Pearl River Community College
– Customized Pre-Employment Training via Pearl River Community College
– Dedicated Project Management support through recruiting, screening and on-boarding processes, provided by Pearl River Community College
– On-the-Job Training (OJT) Program through the WIN Job Center
– Wage criteria must be between $12-$30/hour
– Program provides 50% reimbursement of hourly wages during the allowable training period
– A WIN Job Center OJT Specialist determines the allowable training period depending on each
Application – Petal CBD Application
Ordinance – Ordinance
North Map – North Map
South Map – South Map
– The exemption is available at the discretion of local authorities.
– The value of the ad valorem exemption would be calculated based on the true value of new real and personal property, assessed at a 15% valuation. The millage rates are determined by local authorities.
– The term of the exemption is at the discretion of local authorities but can be available for
up to 10 years.
– Income tax credit of up to $1,000 per year for a five-year period for any full-time position requiring research and development skills
– Any business with positions requiring research or development skills may apply
– Income tax credit used in conjunction with Mississippi Finance Corporation-issued industrial revenue bond
– Based on amount of bond-related debt service
– Credits can use used to offset up to 80% of a company’s state corporate income tax liability each year for the life of the bonds
– Eligible businesses include: manufacturing, telecommunications, data processing, distribution or warehouse facilities
– Provides a 50% exemption to the 7% general sales tax on qualified project purchases
– Provides a 50% exemption on the 1.5% sales tax on machinery and equipment purchases
– Exemption is valid from project start through the 3rd month of operations
SECTOR SPECIFIC INCENTIVES
– Provides companies that manufacture systems or components used to generate clean, renewable or alternative energy a 10-year state year state income and franchise tax exemption and a sales and use tax exemption for the startup of a facility or completion of expansion
– Must invest at least $50M and create at least 250 full-time jobs to qualify
– 10-year state income and franchise tax exemptions
– Sales and Use tax exemption on construction materials, equipment, and software & hardware replacement
– No sales tax on electricity (or other fuel) used to operate data center
– Companies must make a minimum investment of $20 million in the state and create at least 20 new jobs paying 125 percent of the average state wage. Companies must be certified as data centers by the Mississippi Development Authority to qualify.
– An income tax credit for each position assigned to a national or regional headquarters created in, transferred
to or expanded in Mississippi.
– An income tax credit equal to a national or regional headquarters’ actualrelocation costs. Qualified relocation
expenses are non-depreciable expenses necessary to relocate headquarters employees to Mississippi, such as employees’ moving expenses and travel expenses incurred by employees and their families as they search for homes in the state. The credit is applied to the tax year in whichthe relocation costs are paid and can be used with other credits.
– Company must create, transfer or expand its headquarters operations in Mississippi and must create at least 20 new headquarters jobs to receive the credit as defined by the Mississippi Department of Revenue.
The Mississippi Health Care Industry Zone Incentive aims to increase the number of health care jobs in the state and expand access to high-quality medical care for Mississippi residents by encouraging health care-related businesses to locate or expand in Health Care Zones in the state.
The Health Care Industry Zone Incentive provides certified businesses with the following incentives:
– An accelerated, 10-year state income tax depreciation deduction; and
– A sales tax exemption for equipment and materials purchased from the date of the project’s certification until three months after the facility is completed.
In addition, the program allows counties and cities, at their discretion, to grant a 10-year ad valorem tax exemption for certified businesses. Counties and cities may also grant a fee in lieu of property tax for any certified project with an investment of more than $10 million. This fee in lieu of property tax is negotiated between an eligible business and local authorities and may be available for up to 30 years, though no particular parcel of land, real property improvement, or item of personal property can be subject to a fee in lieu for more than 10 years, and the negotiated fee cannot be less than one third of the property tax levy. Certified companies can also qualify for other Mississippi incentive programs.
ELIGIBILITY
The incentive program is designed to benefit businesses engaged in the following:
Medical Supply
Biologics
Laboratory Testing
Medical Projuct Distribution
Diagnostic Imaging
Biotechnology
Pharmaceutical Research & Development
Medical equipment or medicine production and related manufacturing or processing.
To qualify for this incentive, health care-related businesses must commit to create at least 25 full-time jobs and/or invest $10 million and must locate in a Health Care Zone within the state.
– Provides aerospace businesses with 10-year state income and franchise tax exemptions and a sales and use tax exemption for the start-up of a facility or completion of an expansion
– Available to companies that manufacture or assemble components for the aerospace industry or provide research, development or training services for that sector
– Companies must invest at least $25 million and create at least 25 full-time jobs paying at least 110% of the state or county average annual salary
HISTORIC TAX CREDITS
The 10% tax credit is available for the rehabilitation of non-historic buildings that were built before 1936 and that will be used for income-producing purposes other than residential.
– The property must be depreciable – commercial.
– Rehabilitation must be substantial, meaning that the cost of the rehabilitation must exceed the greater of either $5,000 or the adjusted basis of the property.
– The 10% credit applies only to buildings rehabilitated for non-residential uses.
To be eligible for the 20% rehabilitation tax credit, a project must also meet the following basic tax requirements of the Internal Revenue Code:
– The building must be depreciable – commercial or rental.
– The property must be placed in service (i.e., returned to use). Furthermore, the owner must hold the building for five full years after completing the rehabilitation, or pay back the credit.
– The rehabilitation must be substantial, which means that during a 24-month period selected by the taxpayer, rehabilitation expenditures must exceed the greater of $5,000 or the adjusted basis of the building.
– The building must be a certified historic structure when it is placed in service.
A 7 year tax exemption for residential or commercial contributing structures within a Local Historic District or Central Business District which have increased in Tax Assessed value by 20% for residential or 10% for commercial. The maximum tax exemption is not to exceed 50% of the value of the improvements.
Contact City of Hattiesburg – Kermas Eaton, City Clerk at 601-554-4502.
The Mississippi Department of Archives and History is responsible for the administration of the program, which provides for a state income tax credit equal to 25% of the qualified expenses of rehabilitating historic structures used for residential or business purposes.
– To be eligible, the qualified rehabilitation expenditures must exceed:
– $5,000 in the case of an owner-occupied dwelling, or
– 50% of the total basis in the property in the case of all properties other than owner-occupied dwellings.
– All work must meet the Secretary of the Interior’s Standards for Rehabilitation.
– Only rehabilitation expenditures incurred after January 1, 2006, qualify.
– Not-for-profit entities are ineligible to receive the credits.
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