Sales Tax Exemptions

An exemption from sales tax must be specifically provided by law. Exemptions provided in these sections do not apply to taxes levied by Miss. Code Ann. Section 27-65-21 (Contractor's Tax). The exemptions provided in Section 27-65-101 through 27-65-111 are proper deductions when included as part of gross sales reported and when supported by adequate invoices and records.

Exemptions by category
Agricultural Governmental Industrial
Taxes Utility

Other

   

Agricultural

 

(Miss Code Ann Section 27-65-103)

  • Sales of cotton, cottonseed and soybeans in original condition, bagging and ties for cotton, hay baling wire and twine, boxes, crates, bags and cans used in growing or preparing agricultural products for market when possession thereof will pass to the customer at the time of sale of the product contained therein. Sales of ice to commercial fishermen purchased for use in the preservation of seafood or producers for use in the refrigeration of vegetables for market.
  • Sales of farm products (other than ornamental plants) by the producer, except when sold by the producer through an established place of business.
  • Retail sales of livestock.
  • All retail sale of seeds, livestock feed, poultry feed, fish feed and fertilizers. Sales of defoliants, insecticides, fungicides, herbicides and baby chicks used in growing agricultural products for market.
  • Income received from grading, excavating, ditching, dredging or landscaping activities performed for a farmer on a farm for agricultural or soil erosion purposes. (Note: Jobs exceeding $10,000.00 are subject to the 3.5% contactor's tax.)
  • The gross proceeds of sales of drugs, medicines, serums, vaccines, vitamins, minerals, or other nutrients for use in the production and growing of fish, livestock, and poultry.
  • Sales of food products that are grown, made or processed in Mississippi and sold from farmers' markets that have been certified by the Mississippi Department of Agriculture and Commerce.

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Governmental

 

(Miss Code Ann Section 27-65-105)

  • Sales to the United States Government, State of Mississippi, its departments and institutions, counties and municipalities. The exemption does NOT apply on sales to national banks. This exemption applies on sales to federal credit unions but does NOT apply to state chartered credit unions.
  • Sales to the Mississippi Band of Choctaw Indians.
  • Sales to schools supported wholly or in part with funds provided by the State of Mississippi. This exemption does not apply to sales of property which is not to be used in the ordinary operation of the school, or which is to be resold to the students or the public.
  • Sales of fire-fighting equipment to governmental or volunteer fire departments.
  • Sales of any gas from any project, as defined in the Municipal Gas Authority of Mississippi Law, to any municipality.
  • Sales of home medical equipment and home medical supplies listed as eligible for payment under Title XVIII of the Social Security Act or under the state plan for medical assistance under Title XIX of the Social Security Act, prosthetics, orthotics, hearing aids, hearing devices, prescription eyeglasses, oxygen and oxygen equipment, when ordered or prescribed by a licensed physician for medical purposes of a patient., and when payment for such equipment or supplies, or both, is made in part or in total under the provisions of the Medicare or Medicaid program. This exemption shall apply to the total sales price of such equipment or supplies.
  • Sales of school textbooks to students.
  • Sales to regional education services agencies.
  • Sales of buses and other motor vehicles, and parts and labor used to maintain and/or repair such buses and motor vehicles, to an entity that (a) has entered into a contract with a school board under Miss. Code Ann. Section 37-41-31 for the purpose of transporting students to and from schools and (b) uses or will use the buses and other motor vehicles for such transportation purposes. This applies to contracts entered into or renewed on or after July 1, 2010.   

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Industrial

 

(Miss Code Ann Section 27-65-101)

  • Sales of containers to manufacturers and wholesalers to accompany goods sold where possession thereof will pass to the customer at the time of sale of the goods contained therein and sales of containers or shipping material for use in ships engaged in international commerce.
  • Sales of raw materials, catalysts, processing chemicals and welding gases to manufacturers for use in manufacturing a product for sale or rental or repairing or reconditioning vessels or barges of 50 tons load displacement and over. Electricity used directly in the electrolysis process in the production of sodium chlorate shall be considered a raw material. This exemption shall not apply to any property used as fuel except to the extent that such fuel comprises by-products that have no market value.
  • Sales by manufacturers of dry docks, offshore drilling equipment, vessels and barges of 50 tons load displacement and over, when sold by the manufacturer or builder thereof.
  • Repairs of vessels and barges used in interstate transportation or international commerce.
  • Sales to commercial fishermen of commercial fishing boats over 5 tons load displacement and not more than 50 tons load displacement.
  • Sales of containers or shipping material and tangible personal property for use or consumption on board ships engaged in international commerce.
  • Sales of machinery or tools or repair parts, fuel or supplies used directly in manufacturing, converting or repairing ships of 3,000 tons load displacement and over, but does not include office and plant supplies or other equipment not directly used on the ship being built, converted or repaired.
  • Sales of petroleum products to vessels or barges for consumption in marine international commerce or interstate transportation businesses.
  • Sales and rentals of rail rolling stock (and component parts thereof) for ultimate use in interstate commerce and gross income from services with respect to manufacturing, repairing, cleaning, altering, reconditioning or improving such rail rolling stock (and component parts thereof).
  • Sales of raw materials, catalysts, processing chemicals, welding gases or other industrial processing gases (except natural gas) used or consumed directly in manufacturing, repairing, cleaning, altering, reconditioning or improving such rail rolling stock (and component parts thereof). This exemption shall not apply to any property used as fuel.
  • Sales of materials used in the construction of a building, or any addition or improvement thereon, and sales of any machinery and equipment not later than three (3) months after the completion of construction of the building, or any addition thereon, to be used therein, to qualified businesses, as defined in Section 57-51-5, which are located in a county or portion thereof designated as an enterprise zone pursuant to Sections 57-51-1 through 57-51-15.
  • Sales of materials used in the construction of a building, or any addition or improvement thereon, and sales of any machinery and equipment not later than three (3) months after the completion of construction of the building, or any addition thereon, to be used therein, to qualified businesses, as defined in Section 57-54-5
  • Income from storage and handling of perishable goods or derived from the temporary storage of tangible personal property in this state pending shipping or mailing of the property to another state by a public storage warehouse.
  • The value of natural gas lawfully injected into the earth for cycling, or lifting of oil or lawfully vented or flared in connection with the production of oil. re-pressuring
  • The gross collections from self-service commercial laundering, drying, cleaning and pressing equipment.
  • Sales of component materials used in the construction of a building, or any addition or improvement thereon, sales of machinery and equipment to be used therein, and sales of manufacturing or processing machinery and equipment which is permanently attached to the ground or to a permanent foundation and which is not by its nature intended to be housed within a building structure, no later than 3 months after the initial start-up date, to permanent enterprises engaging in manufacturing or processing in Tier Three areas (as defined in Section 57-73-21) which businesses are certified by the Department of Revenue as being eligible for the exemption granted in this paragraph.
  • Sales of component materials used in the construction of a building, or any addition or improvement thereon, and sales of any machinery and equipment not later than 3 months after the completion of the building, addition or improvement thereon, to be used therein, for any company transferring its national or regional headquarters from outside the State of Mississippi and creating a minimum of 35 jobs at the new headquarters in this state.
  • The gross proceeds from the sale of semi-trailers, trailers, boats, travel trailers, motorcycles and all-terrain cycles if exported from this state within 48 hours and registered and first used in another state.
  • Gross income from the storage and handling of natural gas in underground salt domes and in other underground reservoirs, caverns, structures and formations suitable for such storage.
  • Sales of machinery and equipment to nonprofit organizations if the organization: (i) is tax-exempt pursuant to Section 501(c)(4) of the Internal Revenue Code of 1986, as amended; (ii) assists in the implementation of the national contingency plan or area contingency plan, and which is created in response to the requirements of Title IV, Subtitle B of the Oil Pollution Act of 1990, P.L. 101-380; and (iii) engages primarily in programs to contain, clean up and otherwise mitigate spills of oil or other substances occurring in the United States coastal and tidal waters. For purposes of this exemption, "machinery and equipment" means any ocean-going vessels, barges, booms, skimmers and other capital equipment used primarily in the operations of nonprofit organizations referred to herein.
  • Sales or leases of materials and equipment to approved business enterprises as provided under the Growth and Prosperity Act.
  • From and after July 1, 2001, sales of pollution control equipment to manufacturers or custom processors for industrial use. For the purposes of this exemption, "pollution control equipment" means equipment, devices, machinery or systems used or acquired to prevent, control, monitor or reduce air, water or groundwater pollution, or solid or hazardous waste as required by federal or state law or regulation.
  • Sales or leases to a manufacturer of motor vehicles or powertrain components operating a project that has been certified by the Mississippi Major Economic Impact Authority as a project defined in Section 57-75-5(f)(iv)1, Section 57-75-5(f)(xxi) or Section 57-75-5(f)(xxii) of machinery and equipment; special tooling for federal income tax purposes; or repair parts therefore or replacements thereof; repair services thereon; fuel, supplies, electricity, coal and natural gas used directly in the manufacture of motor vehicles or motor vehicle parts or used to provide climate control for manufacturing areas.
  • Sales or leases of component materials, machinery and equipment used in the construction of a building, or any addition or improvement thereon to an enterprise operating a project that has been certified by the Mississippi Major Economic Impact Authority as a project as defined in Section 57-75-5(f)(iv)1, Section 57-75-5(f)(xxi) or Section 57-75-5(f)(xxii) and any other sales or leases required to establish or operate such project.
  • Sales of component material and equipment to a business enterprise provided under Section 57-64-33.
  • The gross income from the stripping and painting of commercial aircraft engaged in foreign or interstate transportation business.
  • Sales of production items used in the production of motion pictures such as film, videotape, component building materials for set construction, makeup, costumes, shoes, accessories and jewelry for wardrobes, set dressing, props and expendable items such as tape, fasteners and compressed air.
  • Sales or leases to an enterprise owning or operating a project that has been certified by the Mississippi Major Economic Impact Authority as a project defined in Section 57-75-5(f)(xviii) of machinery and equipment; special tooling for federal income tax purposes; or repair parts therefore or replacements thereof; repair services thereon; fuel, supplies, electricity, coal and natural gas used directly in the manufacturing/production operations of the project or used to provide climate control for manufacturing/production areas.
  • Sales or leases of component materials, machinery and equipment used in the construction of a building, or any addition or improvement thereon to an enterprise owning or operating a project that has been certified by the Mississippi Major Economic Impact Authority as a project as defined in Section 57-75-5(f)(xviii) and any other sales or leases required to establish or operate such project.
  • Sales of parts used in the repair and servicing of aircraft not registered in Mississippi engaged exclusively in the business of foreign or interstate transportation to businesses engaged in aircraft repair and maintenance.
  • Sales of component materials used in the construction of a facility, or any addition or improvement thereon, sales and leases of machinery and equipment no later than 3 months after the completion of construction of the facility, to permanent enterprises operating a data/information enterprise in Tier Three areas (as defined in Section 57-73-21) meeting minimum criteria established by the Mississippi Development Authority.
  • Sales of component materials used in the construction of a facility, or any addition or improvement thereon, sales of machinery and equipment no later than 3 months after the completion of construction of the facility, to permanent enterprises operating a technology intensive enterprise for industrial purposes in Tier Three areas (as defined in Section 57-73-21) as certified by the Department of Revenue.
  • Sales of component materials used in the replacement, reconstruction or repair of a building or facility that has been destroyed or sustained extensive damage as a result of a disaster declared by the Governor, sales of machinery and equipment to be used therein to replace machinery or equipment damaged or destroyed as a result of such disaster, including manufacturing or processing machinery and equipment permanently attached to the ground or to a permanent foundation not intended to be housed within a building structure, to enterprises or companies that were eligible for an exemption during initial construction of the building.
  • Sales of software or software services transmitted by the Internet to a destination outside the State of Mississippi where the first use of such software or software services by the purchaser occurs outside the State of Mississippi.
  • Gross income of public storage warehouses derived from the temporary storage of raw materials that are to be used in an eligible facility as defined in Section 27-7-22.35.
  • Sales of component materials used in the construction of a building, or any addition or improvement thereon, sales of machinery and equipment to be used therein, and sales of manufacturing or processing machinery and equipment which is permanently attached to the ground or to a permanent foundation and which is not by its nature intended to be housed within a building structure, not later than 3 months after the initial start-up date, to permanent enterprises engaging in manufacturing or processing in Tier Two and Tier One areas (as defined in Section 57-73-21) which business are certified by the Department of Revenue as being eligible for the exemption granted in this paragraph, shall be exempt from ½ of the taxes imposed on such transactions under this chapter.
  • Sales of component materials used in the construction of a facility, or any addition or improvement thereon, sales and leases of machinery and equipment no later than 3 months after the completion of construction of the facility, to permanent enterprises operating a data/information enterprise in Tier Two and Tier One areas (as defined in Section 57-73-21) meeting minimum criteria established by the Mississippi Development Authority, shall be exempt from one-half (1/2) of the taxes imposed on such transactions under this chapter.
  • Sales of component materials used in the construction of a facility, or any addition or improvement thereon, sales of machinery and equipment no later than 3 months after the completion of construction of the facility, to permanent enterprises operating a technology intensive enterprise for industrial purposes in Tier Two and Tier One areas (as defined in Section 57-73-21) as certified by the Department of Revenue, shall be exempt from one-half (1/2) of the taxes imposed on such transactions under this chapter.
  • Sales of equipment used in the deployment of broadband technologies from and after June 30, 2003 through July 1, 2013 shall be either exempt from ½ of the taxes if installed in Tier One counties or totally exempt from taxes if installed in Tier Two or Tier Three counties.
  • Sales of component materials used in the replacement, reconstruction or repair of a building or facility that has been destroyed or sustained extensive damage as a result of a disaster declared by the Governor, sales of machinery and equipment to be used therein to replace machinery or equipment damaged or destroyed as a result of such disaster, including manufacturing or processing machinery and equipment permanently attached to the ground or to a permanent foundation not intended to be housed within a building structure, to enterprises or companies that were eligible for a partial exemption during initial construction of the building shall be exempt from one-half (1/2) of the taxes imposed on such transactions under this chapter.
  • Sales of component building materials and equipment for initial construction of facilities or expansion of facilities as authorized under Sections 12 through 15 and Sections 16 through 19 of House Bill 1701 2010 Regular Session.
  • Sales and leases of machinery and equipment acquired in the initial construction to establish facilities as authorized in Sections 12 through 15 of House Bill 1701, 2010 Regular Session.
  • Sales and leases of replacement hardware, software or other necessary technology to operate a data center as authorized under Sections 16 through 19 of House Bill 1701, 2010 Regular Session.

These exemptions apply to sales of building materials, machinery and equipment when sold to qualified businesses. The sale must be made directly to the qualified businesses or company and payment therefore made by them in order for the exemption to apply. This exemption does not apply to the 3½% contractor's tax levied by Section 27-65-21. Contractors may purchase component materials (building materials) to be used in construction contracts exempt from tax by furnishing their Material Purchase Certificate Number to the vendor. Contractors are liable for the 3½% contractor's tax on total compensation received, which includes these component materials. Contractors who are regularly engaged in the business of selling machinery and/or equipment may apply to the Department of Revenue for a Direct Pay Permit. This permit allows the contractors to purchase such machinery and equipment exempt from tax and remit the proper tax directly to the State of Mississippi. The machinery and equipment must be separately identified from the construction contract and when sold to a business or company qualified under the above references is exempt from tax.

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Taxes

 

(Miss Code Ann Section 27-65-100)

  • Federal retailers' excise taxes and federal tax levied on income from transportation, telegraphic dispatches, telephone conversations and electric energy.
  • State tax refunded on gasoline for non-highway use.

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Utility

 

 

(Miss Code Ann Section 27-65-107)

  • Sales of electricity, gas or other fuel and potable water for residential consumption.
  • Sales to nonprofit water associations of property or services ordinary and necessary to the operation of the water association.
  • Wholesale sales of utilities when such utilities are for resale to consumers.
  • Sales and rentals of locomotives, rail rolling stock and materials for their repair, locomotive water, when made to a railroad whose rates are fixed by the Interstate Commerce Commission or the Mississippi Public Service Commission.
  • Rentals of manufacturing machinery to manufacturers and custom processors who are engaged in, and machinery is used in, the manufacture of containers made from timber wood for sale. The tax, likewise, shall not apply to replacement or repair parts of such machinery used in such manufacture.
  • County emergency telephone (E-911) services (19-5-313).
  • From and after July 1, 2003, sales of fuel used to produce electric power by a utility company primarily engaged in the business of producing, generating, or distributing electric power for sale. 

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Other

 

(Miss Code Ann Section 27-65-111)

  • Sales of ordinary and necessary materials to chartered nonprofit hospitals or infirmaries.
  • Sales of daily or weekly newspapers and periodicals or publications of scientific, literary or educational organizations exempt from Federal income taxation under Section 501(c)(3) of the Internal Revenue Code of 1954 as it existed on March 31, 1975, and subscription sales of all magazines.
  • Sales of coffins, caskets and materials used in preparing human bodies for burial.
  • Sales of property for immediate foreign export.
  • Sales to an orphanage, old men's and old ladies' home supported by a nonprofit organization.
  • Sales to YMCA, YWCA and Boys' and Girls' Club owned and operated by a nonprofit organization or association.
  • Sales to elementary and secondary grade schools, junior and senior colleges owned and operated by a nonprofit corporation or association. This exemption is not applicable when property is for resale to the students or to the public.
  • Retail sales of prescription medicines and drugs.
  • Retail sales of automobiles, trucks and truck-tractors exported from this state within 48 hours and registered and first used in another state.
  • Sales of tangible personal property or services to the Salvation Army, Muscular Dystrophy Association, Inc., National Association of Junior Auxiliaries, Inc. and National Multiple Sclerosis Society, Mississippi chapter.
  • Sales of tangible personal property or services to the Institute for Technology Development.
  • The gross proceeds of retail sales of food and drink for human consumption made through vending machines serviced by full line vendors located apart from and not connected with other taxable businesses.
  • The gross proceeds of sales of motor fuel.
  • Retail sales of food for human consumption purchased with food stamps issued by the United States Department of Agriculture, or other federal agency.
  • Sales of cookies for human consumption by the Girl Scouts of America.
  • Gifts or sales to public or private nonprofit museums of art.
  • Sales to alumni associations of state supported colleges or universities.
  • Sales to domestic violence shelters that qualify for state funding under Sections 93-21-101 through 93-21-113.
  • Retail sales of food for human consumption purchased with food instruments issued the Mississippi Band of Choctaw Indians under the Women, Infants and Children Program (WIC) funded by the United States Department of Agriculture.
  • Sales of tangible personal property or services to a private company, as defined in Section 57-61-5, which is making such purchases with proceeds of bonds issued under Section 57-61-1 et seq., the Mississippi Business Investment Act.
  • The gross collections from the operations of self-service, coin operated car washing equipment and sales of the service of washing motor vehicles with portable high pressure washing equipment on the premises of the customer.
  • Sales to Mississippi Technology Alliance.
  • Sales of tangible personal property to nonprofit organizations that provide foster care, adoption services and temporary housing for unwed mothers and their children if the organization is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code.
  • Sales of tangible personal property to nonprofit organizations that provide residential rehabilitation for persons with alcohol and drug dependencies if the organization is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code.
  • Retail sales of an article of clothing or footwear designed to be worn on or about the human body if the sales price of the article is less than One Hundred Dollars ($100.00) and the sale takes place during a period beginning at 12:01 a.m. on the last Friday in July and ending at 12:00 midnight the following Saturday. This paragraph (bb) shall not apply to:
  • (i) Accessories including jewelry, handbags, luggage, umbrellas, wallets, watches, backpacks, briefcases, garment bags and similar items carried on or about the human body, without regard to whether worn on the body in a manner characteristic of clothing;

  • (ii) The rental of clothing or footwear; and

  • (iii) Skis, swim fi​ns, roller blades, skates and similar items worn on the foot.

  • From and after January 1, 2010, the governing authorities of a municipality, for retail sales occurring within the corporate limits of the municipality, may suspend the application of the exemption provided for in this paragraph (bb) by adoption of a resolution to that effect stating the date upon which the suspension shall take effect. A certified copy of the resolution shall be furnished to the State Tax Commission at least ninety (90) days prior to the date upon which the municipality desires such suspension to take effect.

   
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