GNO, Inc. Sunday Night Highlight – Tax Reform in Louisiana
Earlier this month, Governor Jeff Landry signed into law major changes in Louisiana’s tax code. Key improvements include:
- Simplified Personal Income Tax: Louisiana will now have a flat 3% income tax rate, the second lowest among states with an income tax. This rate is paired with a standard deduction of $12,500 for individuals and $25,000 for couples, making the system simpler and more competitive
- Streamlined Corporate Income Tax: The state replaced its graduated corporate tax structure to a flat 5.5% rate and added a $20,000 standard deduction, aligning with best practices for attracting business investment
- Elimination of the Business Franchise Tax: This reform removes a major obstacle to investment and economic growth by ending a tax that applied to businesses regardless of profitability
- Broader Sales Tax Base: By broadening the sales tax to include digital goods and services and maintaining a 5% state sales tax, Louisiana improved its revenue base while still contending with one of the nation’s highest combined sales tax rates (note: exemptions for food, utilities, and prescriptions remain)
The new laws are aimed at attracting businesses to the state by changing a tax code that many agree is unnecessarily convoluted, inconsistent, and filled with carveouts that have accumulated over the years. Collectively, the new reforms will likely raise Louisiana’s ranking by the Tax Foundation from 40th in the nation, up to 26th, or higher.
Describing the legislation as the beginning of a “new era” in Louisiana, Governor Landry said, “We promised to deliver a government in Louisiana as good as the people, and the best way to do it is to give the people of this state an economy that they can flourish in, that there are good-paying jobs.”
You can read more about the new tax legislation here.