Louisiana Tax Guide 2026

The 2024 tax reform — flat 3% with first dollars tax-free

Act 11 of the 2024 Third Extraordinary Session (signed Dec. 2024 by Gov. Landry) restructured Louisiana's personal income tax effective tax year 2025: • Prior structure: 3 brackets — 1.85% (to $12,500), 3.50% ($12,500–$50,000), 4.25% (over $50,000) • New structure: FLAT 3.0%, with first $12,500 of taxable income (single) / $25,000 (MFJ) EXEMPT • Personal exemption: replaced by the exempt-amount structure above • Federal income tax deduction: REPEALED (was a major Louisiana feature pre-reform) • Excess itemized deduction subtraction: REPEALED For a Louisiana single filer with $75,000 taxable income in 2026: • Pre-reform 2024 estimated tax: ~$2,750 • Post-reform 2026 tax: ($75,000 − $12,500) × 3.0% = $1,875 The restructuring is a meaningful net cut for most middle-income filers; high-income filers may see less benefit because the loss of the federal tax deduction partially offsets the rate cut. Corporate income tax simultaneously flattened to 5.5% (from a 3-bracket up to 7.5%).

Corporate franchise tax — REPEALED

Louisiana's Corporate Franchise Tax (long a Louisiana feature, La. Rev. Stat. §47:601 et seq.) was REPEALED by Act 12 of the 2024 Third Extraordinary Session, effective tax year 2026. Pre-repeal structure: corporations paid $1.50 per $1,000 of capital up to $300k of taxable capital + $3.00 per $1,000 above; minimum $110. Repeal eliminates this entirely — significant relief for capital-intensive Louisiana C-corps. Louisiana LLCs that elected to be taxed as corporations had been subject to franchise tax; with repeal, this is no longer an issue.

Sales tax — second-highest combined in the US

State sales tax: 5.0% (raised from 4.45% effective January 1, 2025 by Act 11). Local jurisdictions add 1.85% to 7% — Orleans Parish combined 9.45%, East Baton Rouge 9.95%, Caddo (Shreveport) 9.6%, Jefferson 9.2%. Louisiana combined average ~9.56% — second-highest in the US behind Tennessee (~9.55%). Louisiana has historically led local-rate complexity: each of 64 parishes can administer its own sales tax independently, with separate audit jurisdiction. The Louisiana Sales and Use Tax Commission for Remote Sellers (created 2017, enhanced 2018) administers a single-portal collection for remote sellers — but in-state sellers still navigate parish-by-parish compliance for the local layer. Economic nexus (La. Rev. Stat. §47:301(4)(m), post-Wayfair): $100,000 OR 200 transactions. Marketplace facilitator law since 2020.

Property tax and the Industrial Tax Exemption Program (ITEP)

Louisiana has among the LOWEST effective property tax rates in the US — statewide average ~0.55%. The Homestead Exemption (La. Const. Art. VII §20) exempts the first $7,500 of assessed value (= $75,000 of fair market value) on owner-occupied primary residences for parish/local taxes (but NOT school taxes in most parishes). Orleans Parish (New Orleans) ~0.55%, East Baton Rouge ~0.61%, Jefferson ~0.53%, Caddo ~0.83%, Lafayette ~0.51%. Industrial Tax Exemption Program (ITEP, La. Const. Art. VII §21(F)): qualifying manufacturers can receive up to 80% property tax exemption for an initial 5 years + renewable for 5 more (was 100%/10 years pre-2016 Edwards executive order reforms). Local parish, school board, and sheriff approval required since 2016. ITEP grants billions in property tax abatement annually — primarily to petrochemical and refining facilities along the Mississippi River corridor. No state-level property tax; all local. Annual reassessments not required; revaluations every 4 years (parishes).

PTET (Pass-Through Entity Election)

Louisiana PTET (La. Rev. Stat. §47:287.732.2, enacted 2019 — among earlier US PTETs): S-corps and partnerships elect to pay state tax at the top individual rate (now 3.0% post-reform) at the entity level. Owners receive a REFUNDABLE Louisiana credit equal to distributive share. Election mechanics: made on Form CIFT-620 (corporate form, used for PTE election); annual; due by 15th day of 5th month after fiscal year-end (May 15 for calendar-year). Federal SALT benefit: 37% × full state tax paid via PTET. For a New Orleans-based S-corp owner with $400k K-1 income: PTET (3.0% on $400k less $12.5k exempt) = $11,625 × 37% federal = $4,301 federal savings. Note: Louisiana PTET at 3.0% is now low enough that the federal SALT-cap benefit is modest. Compare to states with 7%–10%+ PTET rates that generate $10k–$40k+ federal savings per high-K-1 owner.

Self-employed considerations

LLC formation: $100 (Louisiana Secretary of State). Annual Report: $35. No state-mandated paid family leave. Unemployment: 0.09%–6.2% on first $7,700 wage base (low wage base). Louisiana's reform is favorable for self-employed: • Flat 3.0% with first $12,500 / $25,000 exempt • No franchise tax • Modest LLC fees • Low property tax Drawbacks: • High combined sales tax (9.56% average — affects consumer spending) • Parish-by-parish sales tax compliance complexity for product-selling businesses For a New Orleans freelance professional earning $120k: Louisiana state tax ~$3,225 (3.0% × $107,500 over exempt amount). Compare to comparable Mississippi (4% flat, similar exempt amounts) or Alabama (5% top, 3-bracket): Louisiana is now competitive at the middle-income level.

Worked example: Tobias Marchand, New Orleans-based jazz musician + bandleader (single, sole proprietor, 2026)

Tobias's 2026 Schedule C income: $95,000 from gigs and recording sessions. He owns a $325,000 home in Orleans Parish.

Federal: SE tax + ordinary federal (skipped). Louisiana state income tax (2026 post-reform): Federal AGI: ~$95,000 less ½ SE tax (~$6,700) = $88,300 Less first $12,500 exempt amount: $75,800 Louisiana tax: $75,800 × 3.0% = $2,274 Comparison to pre-reform 2024 (hypothetical) tax on similar income: Pre-reform brackets: 1.85% on first $12.5k + 3.50% on next $37.5k + 4.25% on remaining $38.3k Pre-reform tax: ~$2,800 Tobias's savings under reform: ~$525/year Property tax on $325k Orleans Parish home: Assessed at 10% of fair market value (residential): $32,500 Less $7,500 Homestead Exemption: $25,000 net assessed Orleans Parish millage (~14.5% blended for parish + school + special): ~$3,625/yr Note: school portion not exempted by homestead in Orleans, so full bill higher than this back-of-envelope. Sales tax impact (high-spend $35k annually × 9.45% Orleans combined): ~$3,308 (sales tax exposure, not deductible federally absent itemization). LLC consideration: Tobias could form an LLC ($100 formation + $35 annual) to limit liability for his bandleading business; no Louisiana franchise tax now, so the entity overhead is purely federal complexity (Schedule SE vs S-corp tradeoff).

Statute references

• Flat 3.0% personal income tax — La. Rev. Stat. §47:32 (as amended by Act 11 of 2024 3rd ES)
• Corporate income tax (flat 5.5%) — La. Rev. Stat. §47:287.12
• Corporate Franchise Tax — REPEALED — La. Rev. Stat. §47:601 et seq., repealed by Act 12 of 2024 3rd ES
• Sales tax — state 5% — La. Rev. Stat. §47:302 (as amended 2024)
• Sales tax economic nexus — La. Rev. Stat. §47:301(4)(m)
• Pass-Through Entity Tax (PTET) — La. Rev. Stat. §47:287.732.2
• Homestead exemption — La. Const. Art. VII §20
• Industrial Tax Exemption Program — La. Const. Art. VII §21(F)

Related pages

• State Tax Comparison →
• PTET Analyzer →
• Wayfair Sales Tax Nexus →