Processing payroll and calculating Mississippi payroll taxes is a straightforward process—the basic process follows the same as with any state. Mississippi does not have local taxes and only has one state payroll form. It’s one of the easiest states in which to run your company’s payroll. Below, we discuss the step-by-step process of doing payroll in the state, followed by any state and local regulations you’ll need to know to maintain compliance.
Key Takeaways
- Minimum Wage Rate: $7.25/hour
- Overtime Rate: Time and a half ($10.88/hour)
- PTO Regulations: None
- Income Tax Rate: Flat 4.7% on income over $10,000
Step-by-Step Guide to Running Payroll in Mississippi
Mississippi makes payroll easy for businesses by generally following federal guidelines. However, attempting to calculate Mississippi payroll taxes or payroll tax withholding by hand could result in costly mistakes. Here are the basic steps you should follow to run payroll in Mississippi.
New companies may need to access the federal Electronic Federal Tax Payment System (EFTPS) to create a new Federal Employer Identification Number (FEIN). Your FEIN is required to pay federal taxes.
If you’re setting up a business in the state, you need to register on the Mississippi Secretary of State’s website. Any company that pays employees in Mississippi must also register with the Mississippi Department of Revenue.
If you work for an established business, you may already have a payroll process. It could be worth your time to revisit that process and make necessary updates, especially as laws change. Working for a new business may mean you need to create a payroll process from scratch. You can opt to process payroll by hand (not recommended), set up an Excel payroll template, or sign up with a payroll provider (check out our top-recommended payroll services for options) to help you handle your Mississippi payroll.
Your business must have every employee complete payroll forms during their onboarding process. Every employee must complete I-9 verification no later than their first day on the job. New employees must also have a completed W-4 form on file, along with Mississippi’s Form 89-350.
One of the most crucial pieces of your payroll process includes collecting and reviewing time sheets before your payroll due date. There are many ways to track employee time—some of which are free. Reviewing the time sheets from your nonexempt employees before the day your payroll is due gives you time to speak with anyone who might have made mistakes. Learn more about this type of employee classification in our exempt vs nonexempt employee guide.
Calculating Mississippi payroll by hand is not recommended. With income tax and business taxes, including unemployment, these calculations can be complex. Even innocent mistakes can cause costly fines and penalties. Learn more about how to calculate payroll if you need help.
Tax Rate | Taxable Income |
|---|---|
0% | Up to $10,000 |
4.7% | Over $10,000 |
The best way to pay your employees is through direct deposit. But paying via cash (not the best way) and paper check are also options. Mississippi does not have a state minimum wage, so the federal minimum wage of $7.25 per hour applies.
Keeping your company’s business records is good practice, even though Mississippi doesn’t require any record retention. We recommend following the Fair Labor Standards Act (FLSA) and keeping your payroll records for at least three years.
All Mississippi state taxes need to be paid to the applicable state agency on the schedule provided, usually quarterly, which you can do online at the Mississippi Tax Department’s website. To pay federal taxes, you can make those payments online using the EFTPS on one of the following two schedules:
- Monthly:Â When the IRS assigns you a monthly schedule, you need to deposit employment taxes on payments made during a calendar month by the 15th of the following month.
- Semiweekly:Â When the IRS assigns you a semiweekly schedule, you must deposit employment taxes for payments made Wednesday, Thursday, and Friday by the following Wednesday, and for payments made Saturday, Sunday, Monday, and Tuesday, by the following Friday.
Please note that reporting schedules and depositing employment taxes are different. Regardless of the payment schedule you are on, you only report taxes quarterly on Form 941 or annually on Form 944.
Doing payroll in Mississippi requires more than just paying employees on a regular schedule. Every year, you will need to complete payroll reports, including all W-2 Forms and 1099 Forms. You must provide these forms to employees no later than January 31 of the following year.
Download our free checklist to help you stay on track while you’re working through these steps:
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Mississippi Payroll Taxes, Laws & Regulations
Doing payroll in Mississippi will require that you calculate Mississippi payroll taxes and ensure compliance with all federal and state employment laws. To help you maintain compliance with payroll regulations, review Mississippi’s relevant regulations below.
With a few exceptions, most employers in the US must pay Federal Insurance Contributions Act (FICA) taxes. The current FICA tax rate is 6.2% for Social Security and 1.45% for Medicare. Both the employer and the employee will pay these taxes, each paying 7.65% of the combined Social Security and Medicare taxes.
Mississippi Taxes
Like most states, Mississippi has certain taxes that companies must pay. Mississippi also has a flat income tax for wages over $10,000 that you will need to calculate and withhold from every employee’s paycheck. Mississippi does not levy local taxes on employees.
Employer Unemployment Taxes
All businesses in Mississippi must pay State Unemployment Tax Act (SUTA) taxes. The current wage base is $14,000, and rates range from 0.0% to 5.4%. New Mississippi businesses will pay a rate of 1.0% for their first year, 1.1% for the second year, and 1.2% for their third year. Businesses that pay SUTA in full and on time can claim a tax credit of up to 5.4% on their Federal Unemployment Tax Act (FUTA) taxes.
To learn more about FUTA requirements, check out our guide on FUTA and Form 940.
Workers’ Compensation
Mississippi requires every employer with five or more full-time or part-time employees to carry workers’ compensation insurance. Workers’ compensation insurance provides benefits to employees who suffer on-the-job injuries and covers the cost of medical treatment and lost wages. Workers’ compensation payments start on the fourth day of disability.
Income Taxes
Mississippi has a fixed income tax rate that applies to incomes over $10,000 only. The current tax rate is 4.7%, down from a flat 5% in 2023. For tax year 2025, the income tax rate will drop again to 4.4%, and in 2026 it will fall once more to 4%. Income up to $10,000 has a 0% tax rate. This rate will need to be calculated and withheld from every paycheck.
Here are the tax brackets that apply to all Mississippi employees, regardless of filing status:
Tax Rate | Taxable Income |
|---|---|
0% | Up to $10,000 |
4.7% | Over $10,000 |
Mississippi Minimum Wage
Mississippi follows the federal minimum wage of $7.25 per hour. For tipped employees, companies must pay at least $2.13 per hour, provided that their tips get them to the hourly minimum wage. If not, the company must make up the difference.
Calculating Overtime
Mississippi overtime rules follow the Fair Labor Standards Act (FLSA) requirements. Under it, all employers must pay employees 1.5 times their regular hourly wage for hours worked over 40 in a workweek. For example, an hourly employee paid $7.25 per hour will require $10.88 per hour for every hour over 40 worked in a week.
Paying Employees—Frequency & Method
There is no Mississippi law mandating employers to pay employees on a regular basis, except for employees in manufacturing who work for companies with at least 50 employees. These businesses must pay workers at least once every two weeks and within 10 days of the end of the pay period. While there is no law mandating when you pay employees (outside the exception noted), make sure you remain consistent and do not arbitrarily change your pay schedule.
Mississippi does not specify how to pay employees, so you’re free to consider any of the following methods:
Pay Stub Laws
Mississippi has no law requiring employers to provide a pay stub to employees. If you wish to provide one and don’t use a payroll service, download one of our free pay stub templates to help you get started.
Mississippi Paycheck Deductions
Mississippi has no law limiting what deductions an employer can make from an employee’s paycheck, which likely means you’re free to deduct the following items:
- Cash shortages
- Damage to company property
- Required uniforms or tools
- Other equipment costs
- Other items necessary for the employee’s job
Terminated Employee’s Final Paychecks
Mississippi has no law mandating when an employee who is no longer employed with your company must receive their final paycheck. Because there’s no law, it would be a best practice to pay the final paycheck on the regular payroll run. This would apply to employees who are terminated and quit.
Mississippi HR Laws That Affect Payroll
Mississippi has a few state-specific HR laws that you need to know. The state mostly follows federal guidelines, so if you are familiar with those, you should have no issues understanding the additional Mississippi HR laws.
Mississippi New Hire Reporting
Every employer in Mississippi must report new hires and any rehired employees to the Mississippi State Directory of New Hires. This information is used to enforce child support orders and must include the employee’s name, address, and Social Security number.
Meals & Breaks
Mississippi has no laws requiring employers to provide meal breaks or rest breaks to employees. If your company does provide meal and break periods to workers, breaks of less than 20 minutes must be paid, but breaks or meal periods over 30 minutes generally do not need to be paid.
Mississippi Child Labor Laws
Workers aged 16 or older do not have restrictions placed on them. However, workers aged 14 and 15 can only work between the hours of 7 a.m. and 7 p.m., not during school hours, no more than three hours per school day, and no more than 18 hours per week.
Time Off & Leave Requirements
Mississippi Family Leave
Mississippi follows the Family and Medical Leave Act (FMLA), which requires that all eligible employers provide up to 12 weeks of unpaid leave for employees who fall under a covered disability. Pregnancy and taking care of a sick family member are examples. The FMLA doesn’t mandate that employers pay employees during this time away from work, but it does require that employers provide the employee with the same or a similar job once they return to work.
Paid Time Off
Mississippi does not require companies to give employees vacation and paid time off (PTO) benefits. Companies in Mississippi are free to create PTO policies, including whether to pay out accrued and unused PTO when employees leave. Mississippi does not require that companies do, so it’s a good practice to have this clearly defined in your company policy. The important thing is to follow the guidelines in your policy, or you can be held liable.
Holiday Leave
In Mississippi, private companies are not required to pay employees for holidays or to pay them a higher rate for working a holiday. Companies may choose to pay higher rates for holiday workers or require workers to work holidays, provided they adhere to the FLSA.
Paid Sick Leave
Mississippi does not mandate that businesses give employees paid sick leave. Your company may create a policy if you wish and must adhere to that policy, paying attention to FMLA.
Voting Leave
Mississippi does not require employers to provide employees with time off to vote.
Jury Duty Leave
Mississippi employers are not required to pay an employee for time spent serving on a jury. However, Mississippi law prohibits employers from requiring employees to use PTO for jury duty. Companies also cannot attempt to persuade an employee not to serve on a jury or terminate or threaten the employee for jury duty service.
Bereavement Leave
Businesses in Mississippi do not have to provide employees with bereavement leave. Businesses are free to create policies if they choose.
Mississippi Payroll Forms
- Form 89-350: Mississippi’s Employee Withholding Exemption Certificate
Federal Payroll Forms
Here is a complete list and location of all the federal payroll forms you should need.
- W-4 Form: Provides information on employee withholdings so you can properly calculate and withhold federal and state income taxes
- W-2 Form: Is used to report total annual wages for each employee
- W-3 Form: Is used to report total annual wages for all employees; summary form of W2
- Form 940: Is used to calculate and report unemployment taxes due to the IRS
- Form 941: Is used to file quarterly income tax
- Form 944: Is used to file annual income tax
- 1099 Forms: Provides information for non-employee contract work
For a more detailed discussion of federal forms, check out our guide on the federal payroll forms you may need.
Mississippi Payroll Tax Resources
- Mississippi Department of Revenue provides many forms, information on the latest laws and regulations, and other employer-specific information.
- Mississippi Department of Employment Security offers support and resources to help businesses ensure compliance with unemployment and workers’ compensation, plus other labor laws.
Mississippi Payroll Frequently Asked Questions (FAQs)
Mississippi follows the federal minimum wage of $7.25 per hour. The minimum wage for tipped employees is $2.13 per hour, also mirroring the federal standard. Remember, if your tipped workers’ full hourly wage does not equal at least $7.25 per hour after accounting for their tips, you need to make up the difference.
No, Mississippi has no income tax reciprocity with other states. This means if you have an employee living in Alabama and working for you in Mississippi, they may face double taxation.
If you make a payroll mistake in Mississippi, make sure you work to correct the issue right away. If you missed or made an incorrect tax payment, contact the agency and work out your next steps. If you’ve paid an employee incorrectly, speak with them and let them know you’re correcting the issue right away.
Bottom Line
Running payroll in Mississippi is one of the most straightforward of any state. There is only one state-specific payroll form and no local taxes to calculate.
Other State Payroll Guides
Need to know how to pay employees in another state? Click on the state in our interactive map below to learn more.
