MISSISSIPPI DEPARTMENT OF REVENUE
Income Tax Bureau Notice 80-19-001 January 28, 2019
P.O. Box 1033
Jackson, MS 39215 www.dor.ms.gov
Phone: 601.923.7700
FAX: 601.923.7714
Tax Effects From The Tax Cuts and Jobs Act (TCJA) – PL 115-97
PresidentTrumpsignedtheTaxCutsandJobsAct(TCJA)onDecember22,2017. Thelegislationprovided
reduced tax rates for individuals and corporations, increased standard deduction for individuals and
providedforrepatriationofforeignincome. Manyoftheaspectsofthefederallegislationwillnotaffect
MississippitaxpayersasMississippihasitsownstatutoryprovisionsformanyofthechanges. Therefore,
theimpactonMississippirevenueswillnotbeassignificantasmanyotherstates.
ImpactonIndividualIncomeTaxes
The TCJA made the most significant changes to the individual incometaxstructure.Thelegislation
doubled the standard deduction and eliminated the personal exemption. Neither of these changes
affectsMississippi,asourstatutesarespecifictotheseitems.
The TCJA allows an individual taxpayer a 20% deduction of qualified business income fromapass‐
throughentity(partnership,Scorporation,orsoleproprietorship). Mississippidoesnothaveastatutory
provisionforthisdeductionsoitwillbenotbeanallowabledeductionontheMississippireturn.
Thefederallawchangerepealsthedeductionforalimonypaymentsandtheinclusioninincomeofthe
alimony payments to the recipient effective for divorce and separation agreements entered into or
modifiedafterDecember31,2018.Mississippifollowsthefederalrulesforinclusionanddeductionsof
alimonypaymentsasprovidedinSections27‐7‐15(2)(e)and27‐7‐18.
Movingexpenseswillnolongerbedeductibleexceptforactivedutymembersofthemilitarybasedon
militaryorders.Section27‐7‐18(2)providesthedeductionfromMississippiincometaxesinaccordance
withfederalprovisions.
Thefederalprovisionsextendstheexclusionofcancellationofdebt(COD)fromstudentdebtfromgross
incometoincludedischargesduetodeathordisabilityofthestudent.ThisdoesnotaffectMississippi,
aswedonotfollowfederalprovisionsforcancellationofdebt.AllCODisincludedingrossincomefor
statepurposeswiththeexceptionofdebtdischargedthroughbankruptcyasprovidedin11USCSection
346(j)(1).
MISSISSIPPI DEPARTMENT OF REVENUE
Income Tax Bureau Notice 80-19-001 January 28, 2019
P.O. Box 1033
Jackson, MS 39215 www.dor.ms.gov
Phone: 601.923.7700
FAX: 601.923.7714
Themostsignificantstateimpactisduetothechangeinitemizeddeductions.Mississippilawprovides
thattaxpayersareallowedthesameindividualnon‐businessitemizeddeductionswithexceptionsfor
stateincometaxespaid,orothertaxesallowedinlieuofstateincometaxes,gaminglosses,andamounts
withheldongamingwinningsperSections27‐7‐901and27‐7‐903.
Medicalexpensesthatexceed7.5%ofAGIareallowableasanitemizeddeductionfor2017and2018
taxyears.Thelawhadpreviouslyincreasedthethresholdto10%ofAGIforthoseundertheageof65.
Stateandlocaltaxesarelimitedto$10,000.
Themortgageinterestdeductionislimitedtotheintereston$1,000,000ofacquisitionindebtednesson
loans that originated on or before December 15, 2017 and limited to $750,000 of acquisition
indebtednessonloansthatoriginatedafterthatdate.Itallowsthedeductiononsecondhomesbutit
is includedinthelowercapofindebtedness. Intereston homeequity loansisnolongerdeductible
unlesstheloanproceedsareusedtobuy,buildorsubstantiallyimprovethetaxpayer’smainhomeor
secondhome.
Thelimitationontheamountofcashcontributionsallowableasacharitablecontributionhasincreased
from50%to60%.
Casualtyandtheftlossesareonlyallowableforlossesattributabletofederallydeclareddisasterareas.
Mississippilawprovidesthatanycasualtylossiscomputedinaccordance withthe InternalRevenue
CodenotindirectconflictwithMississippiIncomeTaxLaw.However,aspecialruleappliestonet
casualtylosswhichresultswhentheitemizeddeductions,includingtheoriginalcasualtyloss,exceed
grossincome.TherearesomemodificationstothecalculationofthelossasprovidedinSection27‐7‐
20.Thenetcasualtylossisallowedtobecarriedbacktoeachofthethree(3)yearsprecedingthetax
yearofthecasualtylossandforwardseven(7)years.
TheTCJAlimitsthedeductibilityofexcessbusinesslossesthatexceed$250,000forSingletaxpayersand
$500,000forJointfilers.Mississippihasnostatutoryprovisiontofollowthis.Alossisdeductiblein
theyearthelossisgeneratedaslongasitmeetsthestatutoryandregulatoryprovisionsofordinary
andnecessarybusinessexpenses.
MISSISSIPPI DEPARTMENT OF REVENUE
Income Tax Bureau Notice 80-19-001 January 28, 2019
P.O. Box 1033
Jackson, MS 39215 www.dor.ms.gov
Phone: 601.923.7700
FAX: 601.923.7714
Miscellaneous itemized deductions subject to two percent (2%) of adjusted gross income (AGI) are
suspended for tax years 2018 through 2025. These amounts include,butarenotlimitedto,
unreimbursedemployeebusinessexpenses,tax preparation fees, investment expenses,safedeposit
box,etc.
Theoveralllimitationonitemizeddeductions(thePeaseLimitation)issuspendeduntil2025.
Qualifiededucationexpensesforpurposesof529plansarenolongerlimitedtohighereducationbut
willalsoincludeelementaryorsecondarypublic,private,homeschoolsorreligiousschoolexpenses,up
to$10,000peryear.Section37‐155‐113allowsadeductionfrom taxable income for the amounts
contributedtotheMississippi529plans.
TheincreasetotheallowablecontributionstoanAchievingaBetterLifeExperience(ABLE)accountwill
applytoMississippi.
ImpactonBusinessTaxes
TheTCJAincreasesthebonusdepreciationallowancefrom50%to100%forpropertyplacedinservice
afterSeptember27,2017,andbeforeJanuary1,2023. Italsoallowsbonusdepreciationonpurchaseof
usedpropertyremovingtherequirementthattheoriginalusehadtobewiththetaxpayer.
Mississippi does not follow the bonus depreciation provisions. Section 27‐7‐17(1)(f) provides that a
“reasonableallowanceforexhaustion,wearandtearofproperty”isallowableasadepreciationexpense.
Theadditionalamountofdepreciationisdeemednottobeareasonableallowanceperourregulation,
Title35,PartIII,Subpart5,andChapter04.Astheincreaseintheallowabledepreciationamountfor
luxuryautomobilesisaformofbonusdepreciation,Mississippiwillnotfollowtheincrease.
TheTCJAincreasestheSection 179 expensing to$1,000,000from$500,000. Per ourregulation,we
followthefederalprovisionsforSection179property.
Netoperatinglosses(NOL)areamendedundertheTCJAtoremovethecarrybackprovisionsandallow
thelossestobecarriedforwardonly. Thelossesarelimitedto80%oftaxableincomewithoutregardto
theNOL.MississippihasitsownprovisionsforNOLs,whichrequireacarrybackperiodoftwo(2)years
andforwardof20years.Wewillnotfollowthefederalprovisions.
MISSISSIPPI DEPARTMENT OF REVENUE
Income Tax Bureau Notice 80-19-001 January 28, 2019
P.O. Box 1033
Jackson, MS 39215 www.dor.ms.gov
Phone: 601.923.7700
FAX: 601.923.7714
Mississippidoesnotfollowthefederallawinrelationtothedefinitionofacharitablecontributionor
theallowableamount.Thedeductionislimitedtotwentypercent(20%)oftaxableincome,computed
withoutregardtothedeductionforthecharitablecontributions.
TheTCJAlimitstheamountofbusinessinterestdeductionto30%oftaxableincomewiththebalance
oftheinterestcarriedforwardindefinitely.Section27‐7‐17(1)(b)allowsabusinessinterestdeduction
forMississippiwithnolimitation,therefore,we willnotfollowthefederalprovision.Theadditional
amountofinterestdeductionwillbeanadjustmentontheMississippireturn.
TheTCJAeliminatesthedeductionforentertainment,amusementandrecreationexpensesevenwhen
directlyrelatedtotaxpayer’stradeorbusiness.Priorlawallowed a deduction of 50% of expenses
associated with entertainment activities if related to the active conduct of the employer’s trade or
business. Meals may continue to be 50% deductible if the taxpayer is present and the food or
beverageisnotconsideredlavishorextravagant.
MississippiwillfollowthefederalprovisionsperSection27‐7‐17(1)(a)whichstatesthatweshallconform
totheprovisionsoftheIRCof1986.
Mississippiwillfollowtheotherprovisionsrelatedtofoodandbeverageexpense,transportationfringe
benefits,fines,penaltiesandresearchandexperimentalexpendituresperTitle35,PartIII,Subpart05,
andChapter08.
TheTCJAamendstheprovisionsforexclusionofgainsforSection1031exchangesandlimitstheseto
onlyapplytorealpropertynotheldprimarilyforsale.Mississippi follows this provision for an
exchange of Mississippi real property for real property located outside of Mississippi. However,
Section27‐7‐9(f)(1)(A)alsoprovidesanexclusionofgainforMississippipropertyandthisisnotlimited
torealpropertynotheldprimarilyforsale.
Thereareseveralchangesforsmallbusinesses. Thechangeinaccountingmethodallowstaxpayerswith
averagegrossreceiptslessthan$25millionforthepreviousyearstoelecttousethecashmethodof
accounting. Taxpayers will be required to file a change in accounting method with the IRS. We will
followfederalprovisionsforthechangeinmethodofaccountingforcashbasistaxpayersperregulation
MISSISSIPPI DEPARTMENT OF REVENUE
Income Tax Bureau Notice 80-19-001 January 28, 2019
P.O. Box 1033
Jackson, MS 39215 www.dor.ms.gov
Phone: 601.923.7700
FAX: 601.923.7714
Title 35, Part III, Subpart 01, and Chapter 02. A copy of the federal form 3115 is required to be
attachedtotheMississippiincometaxreturn.
Contractorswithaveragegrossreceiptslessthan$25millionforthepreviousthree(3)taxyearsare
exemptfromtherequirementtousethepercentageofcompletionforcontractstobecompletedwithin
two(2)years.Taxpayerswillbeallowedtousethecompletedcontractmethod.
Certainself‐createdproperty suchas dispositionsof“patents,inventions,modelordesign,asecret
formulaorprocess”isnotacapitalassetfordispositionsafterDecember31,2017.Thedefinitionof
capitalassetprovidedinSection27‐7‐99doesnotincludetheitemsintheTCJA.
IRC Section 965 repatriation dividends are non‐business income as foreign sourced dividends for
MississippipurposesperTitle35,PartIII,Subpart08,Chapter06,Section302.01(5)(b).Thedividends
willbeallocatedtoMississippiundernon‐businessallocationrulesifapplicable.
IRCSection951Aprovision for global intangiblelowtaxedincome(GILTI)requires U.S. shareholders
owning at least 10% in one or more controlled foreign corporation(s) to include GILTI in its current
taxableincome.Ingeneral,Mississippiconsidersforeignsourcedincometobenon‐businessincome.