Capital gains tax in Mississippi (2026): selling a business, real estate or farm

The rule that can zero out Mississippi tax on a business sale

Buried in the definitions of Mississippi's income tax law is one of the most seller-friendly provisions in the South. Miss. Code 27-7-9(f)(10) says no gain is recognized on the sale of authorized shares in financial institutions domiciled in Mississippi and domestic corporations, or of partnership interests in domestic limited partnerships and domestic limited liability companies, that have been held for more than one year. The 2025 Form 80-100 instructions point to the same section when telling filers how to report capital gain.

What qualifies is the ownership interest. When the buyer purchases your stock or your LLC membership interest, the gain can fall outside Mississippi tax. When the company sells its equipment, goodwill and real estate and passes the gain through to you, that is an asset sale, and the gain is taxed at the regular 4% rate for 2026. In the worked example that asset sale costs $72,000 at the state level.

The loss netting window

The exclusion has a built-in brake written into the statute (Miss. Code 27-7-9(f)(10)). Excluded gain must first be applied against, and reduced by, losses from sales of the same kind of interests if those losses were incurred in the year of the gain or within the two years before or after it. Sold a losing stake in another Mississippi LLC the year before? That loss is not deductible on top of an excluded gain; it shrinks the exclusion instead. The Form 80-100 instructions (2025) repeat the point and ask for a reconciliation when the Mississippi capital gain differs from the federal amount, with the adjustment reported on Form 80-108, Schedule N.

Asset sale or interest sale: the negotiation

Buyers of operating companies usually want assets, because an asset purchase lets them depreciate the price and leave old liabilities behind. Under the federal rules that preference also creates ordinary income for the seller through recapture, so the purchase price allocation matters. In Mississippi the state stake is larger: an interest sale may remove the whole state layer, worth roughly $72,000 in the example, while an asset sale keeps it.

Two federal tools let both sides meet in the middle, and both carry Mississippi questions to settle with your CPA before signing. A Section 338(h)(10) election treats a stock sale as an asset sale for tax purposes, and a buyer purchasing all of a multi-member LLC is generally treated federally as buying assets. Whether Mississippi still treats those deals as the sale of an interest is a question the statute does not answer directly. The cleaner case is a buyer who truly wants the entity, such as a bank buying a Mississippi bank holding company or a strategic buyer that values the licenses and contracts inside the LLC.

A rate that falls every year through 2030

For gain that is taxed, timing matters. House Bill 1, effective July 1, 2025, sets the rate on taxable income above $10,000 at 3.75% for 2027, 3.5% for 2028, 3.25% for 2029 and 3% for 2030 and later (Form 80-100 instructions, 2025). From 2031 the rate can fall further each year, by 0.2 to 0.3 points, if the Working Cash-Stabilization Reserve Fund is fully funded and revenue beats appropriations by set margins.

A Section 453 installment sale lets an asset seller ride that schedule down. In the worked example, five payments from 2026 to 2030 cut the Mississippi share from $72,000 to $64,500, and the total bill falls by $117,202 because the federal brackets also reset each year. Recapture is still taxed in the year of sale under IRC 453(i), which is why the 2026 slice is larger. The seller financing guide covers the down payment, security interest and personal guarantee terms that protect a seller holding paper.

Real estate and farmland

Direct ownership of land does not fit the ownership-interest exclusion, so a farmer or landlord who sells a deeded parcel pays the regular rate, 4% above $10,000 of taxable income for 2026. Mississippi generally follows the federal computation of gains and losses, including the federal capital loss limits (Form 80-100 instructions, 2025), so a 1031 exchange defers the Mississippi tax along with the federal tax, and a farm installment sale spreads it into lower-rate years without the Section 453A interest charge, since farm property is exempt under IRC 453A(b)(3)(B). Whether land held inside a Mississippi LLC can be sold as an LLC interest under 27-7-9(f)(10) depends on the facts and on how the buyer is treated; it is a question to settle before you list.

Federal layer and next steps

Mississippi's state bill is modest next to the federal one. Federally, long-term gains are taxed at 0%, 15% or 20%, with 20% above $613,700 of taxable income for joint filers (Rev. Proc. 2025-32, 2026), plus the 3.8% net investment income tax for passive owners; see how long-term capital gains are taxed and the net investment income tax analysis. Sellers thinking about moving to Mississippi before a sale should read the residency change analysis, since a new domicile has to be real. Get the Big Sale Tax Analysis to compare an interest sale, an asset sale and a note side by side.

Run your own numbers

Frequently asked questions