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Updated: June 28, 2023
According to the Small Business Administration, over 99% of businesses in Mississippi are small businesses. A quarter-million small businesses call Mississippi home, and they all share one thing in common: they all have to deal with payroll taxes. Luckily, our neat (if we can say so ourselves) payroll calculator is here to help you avoid any payroll tax fiascos for your small business. Whether you own an old-school diner in Jackson, a trendy cafe in Biloxi, or a souvenir store near Elvis’s birthplace, our free calculator can help any Mississippi business get payroll right.
The process is simple. All you have to do is enter each employee’s wage and W-4 information, and the calculator will process their gross pay, deductions, and net pay for both Mississippi and Federal taxes.
Federal payroll taxes for Mississippi employers
First and foremost, we’ll walk through a quick overview of federal payroll taxes that all employees have to pay. However, if you would like to see each step in detail, head on over to our comprehensive step-by-step guide.
- Calculate Gross Pay.
- For hourly employees, simply multiply their hourly rate by the number of hours worked during the pay period. Remember to increase the rate for any overtime hours worked.
- For salaried employees, take their annual salary and divide it by the number of pay periods.
- Bonuses, commissions, or tips also get added to gross pay.
- Subtract Pre-Tax Deductions. If your employees have any pre-tax deductions like 401(k), for example, subtract them from gross pay so that their taxable income is reduced by this amount.
- Calculate the Federal Income Tax. Now that you have adjusted gross pay, you can calculate the amount of federal income tax that your employees owe the IRS. The tax rate ranges from 0% all the way up to 37%. We won’t get into the nitty-gritty here, but you can find all the minute details in the IRS Publication 15-T.
- Deduct FICA Taxes. FICA stands for Federal Insurance Contributions Act, and it collects two taxes that both employees and employers have to pay: Social Security and Medicare.
- Social Security Tax: Withhold 6.2% of each employee’s taxable wages up to $147,000 for the year. Any salary above $147,000 is exempt. As an employer, you also have to match this tax and pay the IRS 6.2% of your employee’s salary dollar-for-dollar.
- Medicare Tax: Withhold 1.45% of each employee’s taxable wages up to $200,000 for the year. If an employee makes more than $200,000, an Additional Medicare Tax (super original, right?) of 0.9% should be withheld. As an employer, you’re only responsible for matching 1.45% of the first $200,000, so you don’t have to worry about paying the Additional Medicare Tax that your high wage employees have to pay.
- Calculate the FUTA Tax. FUTA stands for the Federal Unemployment Tax Act. Employers are responsible for paying 6% of each employee’s first $7,000 of taxable income. Employees are not responsible for paying FUTA. Note that if you pay state unemployment tax in full and on time, you are eligible to receive a 5.4% tax credit, bringing your effective FUTA tax rate down to 0.6%. Be sure to take advantage of this easy credit!
- Subtract Post-Tax Deductions. Many of your employees won’t have post-tax deductions, which can be anything from garnishments like child support to life insurance. But for the ones that do, you will need to make a deduction here and send the deduction to the appropriate jurisdiction.
Mississippi (MS) state payroll taxes in 2023
Mississippi’s state income tax is fairly straightforward. There are just three income tax brackets, and the tax rates range from 0% to 5%. Employees who earn more than $10,000 a year will hit the top bracket.
No cities within Mississippi charge any additional municipal income taxes, so it’s pretty simple to calculate this part of your employees’ withholding.
Mississippi state unemployment insurance (SUI)
As an employer, you’re responsible for paying SUI (remember, if you pay your state unemployment tax in full and on time, you get a 90% tax credit on FUTA).
Mississippi’s SUI rates range from 0% to 5.4%. The taxable wage base in 2023 is $14,000 for each employee (which is the same as 2022).
If you are a new small business owner (congratulations, by the way!), you’ll pay 1% the first year.
Now Prep Your Signature!
That’s all right when payroll taxes are right! Calculate each employee’s net pay, cut those checks (or transfer those direct deposits, whatever suits your employees’ fancy), and make sure you have enough left in your own account to cover FICA and unemployment taxes.
Be sure to submit your federal tax filings by filling out Forms 940 (yearly) and 941 (quarterly). Deposits can also be made on an ongoing basis through the EFTPS payment system. Learn more about the IRS deadlines here.
Do you have employees nearby too? These might be helpful.
More Mississippi state tax resources:
Our payroll calculator can take you far, but you can never learn enough about all the intricacies of payroll taxes, so here are a couple more resources that can help you understand Mississippi payroll a little better:
Mississippi Department of Employment Security (601) 321-6000 | Register Your Business and Pay Unemployment Tax | Employer Services
Mississippi Department of Revenue (601) 923-7700 | Tax Rates | Withholding Tax FAQs
These rates are based on local legislation and can change at any time. Always consult a tax professional if you are unsure about your obligations.
More helpful payroll calculators for Mississippi employers
Employers in the state of Mississippi can use the calculator at the top of this page to quickly calculate their employees’ gross pay, net pay, and deductions in a few clicks. But sometimes employers need to do a little more math before they can cut paychecks. For example, do you occasionally reward top-performing employees in your organization with bonuses? In the eyes of Uncle Sam, these payments are considered supplemental wages and require taxes to be withheld. Also, if you have workers who leave from time to time, you may need to spend some time figuring out their final paychecks. So, if you could use a little more help navigating the numbers, check out some of the calculators listed below.