Two things decide whether a job in Mississippi makes you money: getting the license your work needs, and setting aside the right tax. Mississippi licenses its contractors and taxes their profit, so both are worth getting right before you take work on.
Each section below points to a tool that runs your exact numbers for Mississippi.
Tax in Mississippi
Mississippi has a flat 4% state income tax on top of your federal taxes. A flat rate makes the math simple: the same percentage applies whatever you earn. You still owe federal income tax and self-employment tax on your profit as well, and you make estimated payments to both the state and the IRS through the year.
On sales tax in Mississippi, you are taxed as a retailer on both lump-sum and time-and-materials contracts, so you take a resale certificate on your materials and collect the tax from your customer. Confirm it for your kind of job before you quote.
Work out what to hold back on the Tax Set-Aside Calculator, which runs the federal and self-employment numbers for Mississippi.
Getting paid: liens and retainage
A mechanic's lien is the tool that actually gets a Mississippi contractor paid, and in Mississippi you generally have to record it within 90 days of your own last day of work or furnishing. Miss it and you lose the lien, so the dates matter.
Enforcing it has its own clock. 180 days from filing the lien, cut to 90 days if the owner or contractor records a Notice of Contest of Lien. The lien must carry the 180-day expiry wording in 12-point bold on its face or it cannot be filed at all. Work out your dates on the Lien Deadline tool, and if they are close, get an attorney to confirm them against the statute (Miss. Code §§85-7-405(1)(b), 85-7-409(2), 85-7-421(1), 85-7-423(3)).
On money held back as retainage, here is where Mississippi lands:
- Private work: 5% of the estimated amount of work properly done and the value of materials stored on site or suitably stored and insured off-site.
- Public work: 5% of progress payments made on an estimated percentage of completion.
- Release: Private: 60 days (the statute does not say whether these are calendar or business days) from final completion of the contractor's work, with all necessary certificates of occupancy issued. Public: no number of days is set at all. It falls due on final completion and acceptance of all work.
- Prompt pay: A contractor who without reasonable cause fails to pay a subcontractor within 15 days of being paid owes a penalty of half a percent a day, capped at 15% of the outstanding balance. Anything held above the 5% cap carries 1% a month, and neither the cap nor the interest right can be waived by contract.
Whether the rule covers your job at all is a separate question from the percentage. Private: contracts entered into on or after 1 July 2024. Before that date Mississippi had no private retainage cap at all. Public: contracts of $250,000 or more, or any subcontract regardless of amount.
And the step-down is not the same thing as a right. Mississippi cuts the rate to 2.5% when the work is at least 50% complete, on schedule, and satisfactory in the architect's or engineer's opinion. That drop is not automatic: somebody has to make a finding in your favor first, and reaching the milestone on its own entitles you to nothing. Ask in writing and get the finding recorded. No reinstatement clause in §31-5-33.
Heads up: Mississippi Transportation Commission road and bridge contracts are excluded from the public cap by §31-5-33(2), and no numeric ceiling for them was found in Title 65.
Check the Retainage Calculator before you sign a contract that holds back more.
Free Mississippi retainage letters
Three letters written for Mississippi's rules, with the state's own release clock and its statutory citation already in them. Fill one in on screen and download it as a PDF or a Word file.
- Retainage Release Request (Mississippi), for when the job is done and the money has not come back
- Retainage Overdue: Demand for Payment (Mississippi), for when the release date has passed and nothing has arrived
- Retainage Held Above the Cap: Challenge Letter (Mississippi), for when more is being held than the state appears to permit
Do you need a license in Mississippi?
Mississippi requires a state contractor license to take building work on. The threshold that triggers it: Commercial $50,000 or more; residential building above $50,000; residential remodel above $10,000. Working unlicensed when your job needs a license is the expensive mistake here. Electrical, plumbing, mechanical and HVAC subcontractors on residential jobs are licensed NO MATTER THE DOLLAR AMOUNT (73-59-3(1)(d)). A residential licensee may also do commercial work without a separate certificate provided the job does not exceed 7,500 square feet and two stories. The license comes from Mississippi State Board of Contractors. Mississippi accepts the NASCLA commercial exam, useful if you work across state lines.
Trade licenses for electrical, plumbing and HVAC are usually separate and often required even where a GC license is not. See what applies to your trade on the Contractor License Checker.
Building codes and permits
Mississippi has no single statewide building code, so the edition you build to and whether you need a permit depend on your city or county. Do not assume the town next door adopted the same code or the same amendments.
- Homes: no mandatory statewide code; the Council offers the 2021 IRC as a discretionary minimum, effective 1 July 2024, and an adopting jurisdiction may choose it or either of the two previous editions
- Electrical: 2023 adopted by the State Fire Marshal, but enforcement depends on a local jurisdiction incorporating it by reference
- Energy: no mandatory statewide code for dwellings; ASHRAE 90.1-2010 is mandatory for commercial and state-owned buildings
- Plumbing: no mandatory statewide code; the 2018 IPC is the most recently confirmed discretionary reference, with the 2024 IPC applying to modular homes from 1 July 2026
Mississippi does not run one edition across the whole job, and the energy code is where it splits: no mandatory statewide code for dwellings; ASHRAE 90.1-2010 is mandatory for commercial and state-owned buildings. That matters more than the number itself. If you work on houses, the residential edition is your book, and the single figure quoted in most adoption charts is the commercial one.
Mississippi does not enforce a mandatory statewide building code for private work. The Building Codes Council can only put editions on an approved list; a county or municipality decides whether to adopt one at all, and may pass a resolution declining the scheme entirely. Where a jurisdiction has adopted nothing, no state residential, electrical, energy or plumbing code applies to private work there. The one hard exception is geographic: five Gulf Coast counties, Jackson, Harrison, Hancock, Stone and Pearl River, and the municipalities within them, are required by statute to enforce the wind and flood provisions of the building and residential codes. So the first question in Mississippi is not which edition, it is which county.
Source: Miss. Code Ann. §§17-2-1, 17-2-3 and 17-2-4 (Building Codes Council, local adoption and the coastal-county requirement); Miss. Code Ann. §45-11-101 and the State Fire Marshal for the electrical adoption and state-facility scope; Title 19 Part 7 Chapter 3 (factory-built homes). We have not yet read this row against Mississippi's own adopting authority, so confirm the edition locally before you rely on it.
Check a specific job on the permit tool.
Pay and workers' comp
The minimum wage in Mississippi is the federal $7.25 an hour. Mississippi has NO state minimum wage law. The $7.25 reaches you only through the federal FLSA, so it binds only FLSA-covered employment. Whether it binds a particular job turns on whether the FLSA reaches that employment, which is the part most people miss. Check a rate on the minimum-wage tool.
Workers' comp rates in Mississippi are not published as a single figure; they turn on your trade's class code and your payroll. Get a realistic range on the Workers' Comp Estimator, then get a real quote.
If a client will not pay
If a client will not pay, you can sue for up to $3,500 in Mississippi's Justice Court. That covers most unpaid-invoice disputes for a small outfit; a bigger claim goes to regular civil court where you will probably want an attorney. Walk through whether filing is worth it on the Small Claims checker.
The clock runs the other way too: a client generally has 3 years to sue you over the work under a written contract in Mississippi, with an absolute cutoff 6 years after the job is substantially complete. Work out your exposure on the Warranty & Claim Deadline tool.
Common questions
How much state income tax will I pay in Mississippi?
Mississippi has a flat 4% state income tax on your profit, on top of federal income tax and self-employment tax. Use the Tax Set-Aside Calculator to see what to hold back.
Do I need a contractor's license in Mississippi?
Yes. Mississippi requires a state contractor license. The threshold: Commercial $50,000 or more; residential building above $50,000; residential remodel above $10,000. It is issued by Mississippi State Board of Contractors.
What is the small claims limit in Mississippi?
You can sue for up to $3,500 in Mississippi's Justice Court. The filing fee is typically $50 to $100. Larger claims go to regular civil court.
How long do I have to file a mechanic's lien in Mississippi?
Generally 90 days from your own last day of work or furnishing. Miss it and you lose the lien. Work your own dates out on the Lien Deadline tool.
How much retainage can be held back in Mississippi?
Private: 5% of the estimated amount of work properly done and the value of materials stored on site or suitably stored and insured off-site. Public: 5% of progress payments made on an estimated percentage of completion. The condition on it, in the statute's own terms: Private: contracts entered into on or after 1 July 2024. Before that date Mississippi had no private retainage cap at all. Public: contracts of $250,000 or more, or any subcontract regardless of amount. Run your own figure on the Retainage Calculator.
Are there free Mississippi contract and payment forms?
Yes. This page links 3 retainage letters written to Mississippi's own release clock and carrying its statutory citation. They are free, there is no sign-up, and you fill one in on screen and download it as a PDF or a Word file.
What is the minimum wage in Mississippi?
$7.25 an hour, the federal floor. Mississippi does not set a higher rate of its own, so that floor reaches a worker through federal FLSA coverage rather than through state law. Check a specific job on the minimum-wage tool.
The honest bit
These are the 2026 rules for Mississippi as they stood when this guide was written, and they change: legislatures move thresholds, deadlines and rates every year. Treat this as general guidance to point you in the right direction, not legal, tax or financial advice. Verify anything you rely on at the source (the IRS, the Mississippi tax and licensing agencies, and your local building department) or with a professional. Where Mississippi does something unusual, the detail is called out above rather than glossed over.
Related: Tax Set-Aside Calculator · Mechanic's Lien Deadline · Contractor License Checker · Small Claims checker · Working in Your State
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Sources
- Mississippi contractor licensing authority · Mississippi contractor licensing authority. Who must hold a contractor or trade license in Mississippi, and the licensing instrument (https://www.nascla.org/commercial-exam-participating-state-agencies/mississippi-state-board-contractors-0)
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