Running a business in Mississippi means keeping track of sales tax, and it’s not just about adding a few extra cents at checkout. Whether you’re a restaurant, retailer, or service provider, understanding how to calculate and file sales tax correctly helps you stay compliant and avoid headaches later. Let’s break down what you need to know about Mississippi’s sales tax rate, how to calculate it for your transactions, and how tools like DAVO by Avalara can simplify the process for your business.
What is Mississippi’s sales tax rate?
The statewide sales tax rate in Mississippi is 7%, but depending on your city or county, you might need to collect additional local sales taxes. For example, some municipalities add up to 1% more, bringing your total rate to as much as 8% in certain areas. For example, the sales tax rate in Biloxi, Mississippi, is 7%. However, in Jackson, Mississippi, the sales tax rate is a combined 8%. You can always check the Mississippi Department of Revenue’s website for a list of sales tax rates by city and county.
Sales tax applies to most retail sales of tangible goods and some services. However, it’s important to check whether your specific products or services are taxable, since exemptions can apply, especially for manufacturing, agriculture, or nonprofits.
How to calculate sales tax in Mississippi?
Calculating sales tax is straightforward once you know your local rate. Most of the localities in Mississippi stick to the statewide sales tax rate of 7%, without adding on additional local rates. You’ll multiply your item’s selling price by the applicable sales tax rate. For example, if you sell a product for $100 in a city with a 7% total rate, the sales tax would be:
$100 × 0.07 = $7
The total amount your customer pays is $107. However, if you want your prices to already include sales tax, as many restaurants or salons prefer? That’s where things can get a little tricky. You’ll need to work backward to figure out how much of the total price is tax versus revenue.
Use our sales tax calculator
If you prefer to display “tax-included” pricing (like $100 instead of $100 + tax), our reverse sales tax calculator makes it simple. Instead of guessing, you can plug in your total sale amount and your local tax rate, and the calculator will show you exactly how much of that total is pre-taxed before entering it in your POS system.
This is especially helpful for businesses that want to present clean, round pricing while still staying compliant with Mississippi’s tax requirements. Plus, DAVO can automatically set aside and file your sales tax for you, saving you from missed deadlines or late fees.
What is subject to Mississippi sales tax?
In Mississippi, most retail sales of tangible personal property are subject to sales tax. That means if you’re selling physical goods, like clothing, electronics, furniture, or restaurant meals, you’ll need to collect sales tax at the point of sale.
Services, on the other hand, are taxable only if specifically listed by the state. Mississippi taxes several common business services, including:
- Repairs and maintenance of tangible items (like vehicles or equipment)
- Laundering and dry cleaning services
- Certain lodging and short-term rentals
- Admissions to amusement, entertainment, or recreational events
If your business provides services that aren’t on the taxable list, they’re generally exempt. Still, it’s always smart to double-check with the Mississippi Department of Revenue (DOR) for a list of taxable items and services, since rules can change or vary depending on the nature of your business.
Mississippi sales tax on groceries and food
Mississippi recently lowered the sales tax rate on groceries and drinks for human consumption from 7% to 5%, giving a small break to both retailers and consumers. For business owners, this change means you’ll need to pay closer attention to how food items are categorized at checkout. Here’s the breakdown:
- 5% tax rate applies to groceries and beverages for human consumption, such as fresh produce, dairy products, bottled water, and most non-alcoholic drinks.
- 7% tax rate still applies to prepared foods, including restaurant meals, hot foods, catering, and ready-to-eat items.
- Alcoholic beverages, dietary supplements, and vitamins remain taxable at the statewide 7% rate.
If you’re running a grocery store, deli, or restaurant, this distinction matters. Misclassifying products at the register could lead to over-collection, underpayment, or errors that add up during reporting.
For businesses with high point-of-sale volume, like restaurants, cafés, grocery stores, and convenience shops, tracking sales tax across multiple categories and for each sale can be a real challenge. That’s where DAVO comes in.
DAVO automatically syncs with your point-of-sale system to track your daily sales and tax collections in real time. Each day, it sets aside the exact amount of sales tax you’ve collected, ensuring those funds are always ready when it’s time to file. When your filing deadline arrives, DAVO takes care of the rest by submitting your return and remitting payment directly to the Mississippi Department of Revenue on your behalf.
Whether you’re processing hundreds of small transactions each day or managing multiple store locations, DAVO helps you stay compliant and stress-free. You can focus on running your business while DAVO handles the busywork of sales tax.
What is exempt from sales tax in Mississippi?
Not everything sold in Mississippi is taxable. As a business owner, it’s important to understand which products, services, or transactions are exempt from sales tax, so you don’t overcharge customers or overpay when filing.
Here are some of the most common exemptions:
- Sales for Resale
If you sell products to another business that will resell them, those transactions are exempt as long as the buyer provides a valid resale certificate. You’ll need to keep these certificates on file to prove the exemption during an audit. - Sales to Government and Nonprofit Organizations
Certain sales to federal, state, and local government agencies are exempt. Some nonprofit organizations, like schools, churches, and charitable groups, may also qualify for sales tax exemptions if they hold a Mississippi sales tax exemption certificate. - Manufacturing and Industrial Exemptions
Businesses engaged in manufacturing, processing, or assembling products for sale can often purchase raw materials and machinery used directly in production without paying sales tax. This helps reduce costs on items that are essential to the manufacturing process. - Agricultural and Forestry Exemptions
Farmers and foresters may qualify for exemptions on specific equipment, feed, seed, and fertilizer used in their operations. These exemptions are designed to support Mississippi’s agricultural industry. - Prescription Drugs and Medical Equipment
If you operate in the healthcare or pharmaceutical space, note that prescription medications and many medical devices are exempt from Mississippi sales tax.
How to manage tax-exempt sales in Mississippi?
If your business sells to other retailers, government agencies, or nonprofits, you’ll likely encounter tax-exempt sales from time to time. Managing these transactions correctly is key to staying compliant and avoiding issues during a Mississippi Department of Revenue audit.
In Mississippi, tax-exempt sales typically include resale transactions, government purchases, and sales to qualified nonprofit organizations. However, to treat a sale as exempt, you must have proper documentation, specifically a valid letter of exemption or resale certificate issued by the Mississippi Department of Revenue.
It’s important to note that Mississippi does not allow blanket certificates. Each exempt customer must provide their own valid letter of exemption for your records. You should collect this documentation at the time of sale and verify that it’s current and properly completed. Keeping a digital or physical copy on file ensures you have proof of exemption if the state ever audits your business.
It’s also wise to review your exemption files periodically to make sure all certificates are still valid. Missing or expired forms can result in penalties or additional tax assessments if the state determines you should have collected sales tax.
Mississippi sales tax holiday
Mississippi offers two annual sales tax holidays, and if your business sells eligible items, it’s important to prepare in advance. These tax-free weekends can be busy times for retailers, and understanding the rules ensures you stay compliant while keeping customers happy.
- Back-to-School Sales Tax Holiday (July)
Each summer, usually in July, Mississippi holds a back-to-school sales tax holiday that exempts certain clothing and footwear items from sales tax. However, this holiday comes with a price cap: only individual items priced under a specific limit qualify for the exemption. Items that exceed the limit or fall outside the approved categories must still be taxed. - Second Amendment Sales Tax Holiday (August)
In August, Mississippi hosts its Second Amendment tax holiday, which exempts sales of firearms, ammunition, and certain hunting supplies from state sales tax. This is a busy weekend for outdoor retailers and sporting goods stores, so it’s essential to review which items qualify before the event begins.
Because these holidays are temporary and item-specific, business owners should carefully review the official guidance each year to ensure compliance. The Mississippi Department of Revenue publishes detailed lists of eligible and non-eligible products, along with specific price limits and dates.
Make sure your POS system is updated before each holiday so qualifying items are correctly flagged as tax-exempt. Charging sales tax by mistake or failing to collect it when required can lead to filing errors or refund headaches later.
How to register for a Mississippi sales tax permit?
Before you can collect or remit sales tax in Mississippi, your business must first register with the Mississippi Department of Revenue (DOR). This registration gives you a Mississippi Sales Tax Permit and allows you to collect sales tax legally from your customers.
You can apply online through the Taxpayer Access Point (TAP) portal on the DOR website. The online application is simple: just create an account, enter your business information (like your federal EIN, type of business, and address), and select the tax accounts that apply to your operations.
After you register, the Department of Revenue will mail you a packet containing your sales tax permit and detailed instructions for filing your returns. It typically takes about two weeks for your packet to arrive. If you haven’t received it after that time, or if you have questions about your registration, you can call the DOR at (601) 923-7700. Be sure to have the date you registered and your confirmation number ready when you call.
All in-state businesses with retail sales in Mississippi are required to register for a sales tax permit and number. Out-of-state businesses that operate a physical location in Mississippi must also register, collect, and remit Mississippi sales tax.
Even if you don’t have a physical location in the state, you may still have sales tax responsibilities. Out-of-state sellers represented in Mississippi by local salespeople who solicit or accept orders for products delivered within the state are required to collect and remit Mississippi use tax.
Make your sales tax less taxing with DAVO.
How to file Mississippi sales tax return?
Once your business is registered and collecting sales tax, the next step is filing your returns on time. The Mississippi Department of Revenue (DOR) requires that returns be filed and tax paid by the due date to avoid penalties and interest. Penalties apply immediately after the due date, while interest starts accruing the following month.
Most businesses now file their returns online through TAP. Online filing is fast, secure, and required if your business reports more than four different tax rates, or if you have multiple sales tax accounts or locations.
When filing online, it’s important to remember that completing your return and paying your tax are two separate steps. You must do both to satisfy your filing requirements.
If your business doesn’t file online, the DOR will mail you a pre-addressed paper sales tax return about 30 days before it’s due. Completed paper returns and payments must be mailed by the due date to the Mississippi Department of Revenue, P.O. Box 960, Jackson, MS 39205
In addition to filing regularly, businesses are expected to maintain accurate records that support their tax filings. The DOR requires you to keep at least four years of business records, though it’s wise to retain them longer. Your files should clearly document your sales, purchases, beginning and ending inventories, canceled checks, invoices, receipts, bills of lading, and any other documentation related to your operations.
If you claim exemptions or reduced tax rates, you’ll also need to keep detailed proof, such as customer names, addresses, sale dates, items sold, and the amount of the exemption or discount. The burden of proof rests on the seller, so having well-organized records ensures you can easily substantiate your filings if audited. Otherwise, if you are unable to provide these records, you may be subject to paying the 7% tax as well as penalties and interest for those sales.
How to pay Mississippi sales tax?
After filing your return, the next step is to submit your payment by the same due date. Payments can be made electronically through the TAP portal, where you’ll have the option to pay using a credit card, debit card, or eCheck.
If you’re filing a paper return, you can mail your check or money order along with the completed form to the DOR address listed above.
It’s important to pay on time. Interest and penalties start accruing once the due date passes, even if your return has been filed. Staying current helps your business maintain good standing with the state and avoids unnecessary fees.
When is Mississippi sales tax due?
In Mississippi, sales tax returns are due on or before the 20th day following the end of your reporting period. That means if you’re filing for January, your return and payment are both due by February 20.
The filing frequency for your business depends on the total amount of sales tax you remit to the Mississippi Department of Revenue (DOR) each year:
- Monthly filing – If your total annual payment exceeds $3,599, you’ll file each month.
- Quarterly filing – If your total annual remittance is between $600 and $3,599, you’ll file quarterly.
- Annual filing – If your total annual tax payment is less than $600, you’ll file just once a year.
If you’re mailing your return, the DOR considers it “filed” based on the postmark date. So make sure your envelope is postmarked on or before the due date to avoid penalties and interest.
Mississippi Vendor Discount on Sales Tax Filing
Mississippi rewards businesses that file and pay their sales tax on time with a small vendor discount. If you collect, report, and remit your taxes in full by the due date, you may claim a 2% discount on the amount due.
However, there are limits and restrictions. The discount is capped at $50 per reporting period, not to exceed $600 in a calendar year. This discount does not apply to taxes on utility services, wholesale beer and alcoholic beverages, items from vending machines, and contracting taxes.
It’s important to stay compliant. If your return is filed late or underpaid, you’ll no longer be qualified to receive a discount for any of your business locations.
If your company operates in multiple states, our guide on state sales tax discounts can help you see where similar vendor discounts are available and how much you can save by filing on time everywhere you do business. With DAVO, this collection allowance is returned to the business in full, sometimes covering the full subscription cost to DAVO.
Information on Mississippi sales tax penalty and interest
Staying on top of your filing and payment deadlines is essential for avoiding costly penalties. In Mississippi, if your business is late in filing or paying sales tax, or if there’s a deficiency due to negligence or failure to comply with state law, the Department of Revenue may assess penalties and interest on the amount owed.
A penalty of 10% may be applied to the total amount of tax that’s deficient or delinquent. In addition, interest accrues at a rate of 0.5% per month starting the month after the tax was due and continues until the balance is fully paid. Depending on how long a balance remains outstanding, these charges can add up quickly and become a significant financial burden.
How DAVO can help with Mississippi sales tax
Managing sales tax in Mississippi can be tricky, especially when you’re juggling local rates, exemptions, and busy sales periods like tax holidays. For small business owners, from restaurants in Jackson to boutiques on the Gulf Coast, keeping up with filings and payments isn’t just time-consuming. It can be stressful.
DAVO automatically connects to your point-of-sale system, tracks your daily sales and tax collections, and sets aside the exact amount of sales tax you owe. When it’s time to file, DAVO submits your return and makes your payment directly to the Mississippi Department of Revenue, accurately and on time, every time, guaranteed.
Running a business in Mississippi means more than great service and Southern hospitality. It means keeping your tax obligations in check. Whether you’re a café serving sweet tea in Oxford or a retailer on the Gulf Coast preparing for the next back-to-school rush, DAVO takes the guesswork out of sales tax so you can focus on your customers, not compliance.
Choose your POS system to get started with DAVO.
Mississippi Department of Revenue Information:
(601) 923-7700
