Short-Term Rental Taxes in Mississippi: What Investors Need to Know in 2025

Mississippi's STR market is smaller and more concentrated than most Southern states, with activity primarily on the Gulf Coast (Biloxi, Gulfport, Ocean Springs) and in Oxford (home to the University of Mississippi). The state has a 5% flat income tax and full conformity to federal bonus depreciation — meaning Mississippi STR investors benefit from cost segregation on both their federal and state returns in year one.

Mississippi State Income Tax

Mississippi's 5% flat income tax applies to net rental income after all deductions. Mississippi begins with federal taxable income and makes state-specific adjustments. Because Mississippi conforms to federal depreciation methods — including bonus depreciation — the same depreciation deductions on your federal Schedule E also reduce your Mississippi taxable income. Cost segregation is particularly efficient in Mississippi since federal and state benefits accrue simultaneously.

Mississippi Sales Tax on STR Rentals

Mississippi imposes a 7% state sales tax on short-term rental accommodations (stays under 30 days). With one of the higher state sales tax rates in the country, STR operators must register with the Mississippi Department of Revenue to collect and remit. Airbnb acts as a marketplace facilitator in Mississippi for state sales tax collection on its platform bookings.

Mississippi Lodging Tax Overview

The Gulf Coast STR Market

Mississippi's Gulf Coast stretches from Bay St. Louis to Pascagoula, with Biloxi and Gulfport as the principal population centers. Biloxi has a significant casino and entertainment industry that drives substantial visitor volume. Ocean Springs, directly east of Biloxi, is an arts-focused community with a walkable downtown that has developed a boutique STR market attracting coastal tourism and festival visitors.

The Gulf Coast STR market competes with Mobile, Alabama and the Florida Panhandle. Property values on Mississippi's Gulf Coast are generally lower than comparable Alabama or Florida Gulf properties, which can create attractive gross yield ratios for cost-conscious investors willing to accept more modest absolute revenue numbers.

Oxford: The College Town STR Market

Oxford is home to the University of Mississippi — and Ole Miss football drives intense demand during 7–8 home game weekends per year. Game weekend STR rates in Oxford routinely run 5–10x normal nightly rates for the biggest games against rivals like Alabama, LSU, and Tennessee. The challenge is that Oxford's STR market is intensely seasonal and event-driven. Strong football weekends compensate for relatively quiet off-season periods.

Cost Segregation in Mississippi

Mississippi's full bonus depreciation conformity and 5% flat tax means every dollar of cost segregation deductions reduces both federal and state taxes simultaneously. For a $400,000 Gulf Coast property with $90,000 in cost seg deductions, the combined first-year benefit is approximately $33,300 federal (at 37%) + $4,500 state = $37,800 total, against a typical study cost of $4,000–$7,000.