Key takeaways
- Every S corporation with Mississippi sources files Form 84-105, even if inactive, until it is dissolved or withdrawn with the Secretary of State.
- Franchise tax is $0.75 per $1,000 for tax year 2025 and scheduled at $0.50 per $1,000 for tax year 2026, on capital above $100,000 with a $25 minimum.
- Nonresident shareholders need a signed Form 84-380 on file, or the corporation owes tax for them at 5 percent of their Mississippi share (the 2025 instructions' rate).
- Composite returns and the electing pass-through entity election are different routes, and the election binds later years until revoked.
Which return a Mississippi S corporation files
The return is Form 84-105, the Pass-Through Entity Tax Return. The instructions say every S corporation domesticated in or qualified to do business in Mississippi, engaged in business there, or having sources of income there must file, even if inactive. The duty continues until the corporation is officially dissolved or withdrawn through the Secretary of State, so a dormant entity never dissolved still owes a return and the minimum franchise tax.
Form 84-105 is not filed until the corporation has filed Form 2553 and been notified that the IRS accepted the election. A new client who mailed a 2553 in the spring and has no acceptance letter needs a chase first. A copy of the federal Form 1120-S goes behind the state return.
What is confirmed for 2026 and what is not
The Department's latest published instructions cover tax year 2025. I found no tax year 2026 instructions or forms.
Franchise tax: $0.50 per $1,000 for 2026 is scheduled in the phase-out table printed in the 2025 instructions, not restated in a 2026 form. Composite and electing PTE income tax: the 0, 4 and 5 percent schedule, the $5,000 or 10 percent composite deduction, the $200 estimate trigger and the 5 percent default-payment rate are confirmed for tax year 2025 only. Mississippi has legislated individual rate cuts for later years, so do not assume the 2025 schedule holds for 2026 returns. Quote 2025 figures as 2025 figures, and rerun the numbers when the 2026 instructions appear. The e-file threshold and penalties below are also 2025 figures.
Franchise tax: the part scheduled to change for 2026
The corporation pays franchise tax, not income tax, on Form 84-105. The phase-out table gives $0.75 per $1,000 of capital over $100,000 for tax year 2025, $0.50 for tax year 2026, $0.25 for tax year 2027, and repeal effective January 1, 2028. The minimum tax is $25. Do not apply the 2026 rate to a 2025 return that is still open.
Worked example: Mississippi taxable capital of $400,000 is $300,000 over the exemption. The 2025 tax is $225; at the scheduled 2026 rate it is $150. Capital is computed on Form 84-110, taxable capital is line 18, and it feeds line 1 of Form 84-105. Net book value is generally accepted, so the year-end balance sheet drives the number. Reserves not definitely known, and fixed liabilities, count as capital.
Due dates and extensions
Form 84-105 is due the 15th day of the third month after year end, March 15 for a calendar-year corporation, moving to the next business day if that is a weekend or legal holiday. For the 2026 return, March 15, 2027 is a Monday, so the date holds. The IRS instructions for Form 1120-S give March 16, 2026 for the 2025 return because March 15 was a Sunday.
Mississippi follows federal filing and extended due dates, so a timely federal Form 7004 extends filing of the state return. It does not extend payment. Remit what is due with Form 83-180 on or before the original due date. Late tax carries interest of one-half of one percent per month plus a penalty of one-half of one percent per month, capped at 25 percent.
Late filing is 5 percent per month, capped at 25 percent; for income tax returns it is not less than $100. An incomplete return costs $25 per missing attachment or schedule, up to $500. With assets of $250,000 or more, or 100 or more K-1s, the 2025 instructions require e-filing through authorized software; pass-through returns cannot go through TAP. The e-file penalty is $25 for the first miss and $500 for each after.
Nonresident shareholders: the agreement and the default payment
Every nonresident shareholder must sign an agreement to file a Mississippi return, pay the tax and submit to Mississippi jurisdiction. That is Form 84-380, kept in the corporation's permanent files and not sent with the return. If the corporation never obtains it, or the shareholder fails to file and pay, the corporation must pay the state the highest marginal rate (5 percent in the 2025 instructions) times that shareholder's pro rata share of Mississippi income.
Worked example: Mississippi income is $200,000 and a Tennessee shareholder owns 40 percent with no agreement and no Mississippi filing. The corporation owes $4,000, which is 5 percent of the shareholder's $80,000 share. Because the payment rests on pro rata share, a mid-year stock sale changes the base, so keep ownership dates with the agreement.
The agreement and composite membership are separate. The 84-380 protects the corporation against the default payment; a composite return is a consensual way to pay the shareholder's tax. A nonresident who will file an individual return must not be in a composite and should pay estimates on Form 80-106. Get the 84-380 at onboarding, before the first K-1.
Composite returns
A composite return has the corporation pay Mississippi income tax for consenting nonresidents on Form 84-105. A nonresident qualifies only if the Mississippi activity is limited to this entity's income, and once in, stays in. The instructions allow a deduction of $5,000 or 10 percent of composite net income, whichever is less, in place of exemption and deduction.
Worked example at the tax year 2025 schedule, 0 percent on the first $5,000, 4 percent on the next $5,000 and 5 percent above $10,000: composite income of $60,000 gets the $5,000 deduction, since 10 percent would be $6,000. Taxable income is $55,000, and tax is nothing on the first $5,000, $200 on the next $5,000 and $2,250 on the remaining $45,000, for $2,450. This is a 2025 computation; do not quote it as the 2026 liability until the 2026 instructions confirm the schedule and deduction.
If liability is over $200, at least 90 percent is due in four installments on the 15th of the fourth, sixth, ninth and twelfth months, which is April 15, June 15, September 15 and December 15 for calendar-year filers. On $2,450 that is $2,205, about $551 a quarter. Form 83-305 computes underpayment, and the penalty is 10 percent plus interest.
The electing pass-through entity election and the federal SALT workaround
An S corporation can elect to pay the income tax itself, for calendar year 2022 and after. Owners holding more than 50 percent of voting control must approve unless the governing documents set another threshold. File Form 84-381 during the tax year, or by the return's due date or extended due date, or by the date the return is filed, whichever is latest. It binds that year and every later year unless revoked, so a 2026 election is a standing decision. Fiduciaries cannot make it.
Most clients elect for the federal benefit. IRS Notice 2020-75 says state income tax imposed on and paid by an S corporation on its income is deductible in computing non-separately stated income and is not counted against a shareholder's SALT limit. It shows up on the federal K-1 as lower ordinary income. On the Mississippi side the entity checks the electing box on Form 84-105 and pays at the schedule above, confirmed only for 2025. Compare the entity-level tax with what each shareholder would otherwise owe individually before recommending it.
The entity attaches Form 84-381 and a Mississippi K-1, Form 84-132, for every shareholder showing the tax paid on that person's behalf. I found no separate K-1 delivery date in the instructions, so give shareholders the 84-132 with the federal K-1, no later than the return's due or extended due date. Each shareholder claims the credit on Form 84-161 with a copy attached. The 90 percent estimate rule applies.
What to collect from the client
Ask for the filed Form 1120-S with every Schedule K-1, then the Mississippi items. Send this: "Please send the year-end balance sheet, a list of every shareholder with state of residence, ownership percentage and SSN, and a signed Form 84-380 for each shareholder who lives outside Mississippi." Ownership goes on Schedule K, Form 84-131, as a four-decimal figure, so 25 percent is 25.0000.
For apportionment, request gross receipts and property by state. For federal-to-state differences on Form 84-122, ask about bonus depreciation, charitable contributions and any net operating loss, since Mississippi does not conform to federal NOL rules and uses Form 84-155. Also get credits, prior composite payments, any Form 84-381 already filed, and the Form 2553 acceptance date.