Louisiana Tax Rates

This post provides an overview of the primary taxes levied at the state level in Louisiana. The information contained here is intended for general reference. For individuals or businesses seeking comprehensive support with tax filings, compliance, or strategic planning, indinero offers expert services. We encourage all who utilize this summary to explore the tailored tax support available through indinero.

Individual Income Tax

Louisiana has recently undergone significant tax reform, transitioning from a graduated rate system to a flat rate individual income tax.

  • State Rate (2025): For tax years beginning on or after January 1, 2025, the state income tax rate is a flat 3.00% of Louisiana taxable net income.
  • Retirement Income: Social Security benefits are not taxable in Louisiana. The state also allows a significant exclusion for certain retirement income, such as pension income, for taxpayers aged 65 or older.
  • Standard Deduction: As part of the tax reform, Louisiana substantially increased its standard deduction amount to align more closely with federal levels, significantly reducing the income subject to state tax for many residents.

Sales and Use Tax

Sales tax is a key revenue source in Louisiana, and the state has one of the highest average combined sales tax rates in the U.S.

  • State Rate (2025): The state sales tax rate is 5.00% (increased from 4.45% effective January 1, 2025) on the retail sale of tangible personal property and certain services.
  • Local Taxes: Local jurisdictions (parishes, municipalities, and school districts) impose very high and varied local sales taxes. The average combined state and local sales tax rate is approximately 10.11%, but the total rate can exceed 11% in some areas.
  • Local Administration: A unique challenge for businesses is that many local sales taxes are administered and collected by local tax authorities rather than the state, necessitating separate filings.
  • Exemptions: Essential items like prescription drugs are exempt from the state sales tax.

Property Tax (Ad Valorem Tax)

Property taxes in Louisiana are collected exclusively at the local level by parishes and other local taxing bodies. Louisiana is known for having some of the lowest property tax rates in the country.

  • Assessment Ratio (Residential): Residential property is assessed at a very low 10% of its fair market value. Commercial buildings are assessed at 15%.
  • Homestead Exemption: The state provides a substantial constitutional Homestead Exemption of $75,000 of the assessed value of a primary residence. When combined with the low assessment ratio, this significantly reduces the property tax burden for homeowners.
  • Tax Calculation: The local millage rate (set by parish and city budgets) is applied to the low assessed value to determine the final tax amount.

Corporate Income Tax

Louisiana imposes an income tax on corporations that do business or earn income from sources within the state.

  • Tax Rate (2025): For tax years beginning on or after January 1, 2025, the corporate income tax rate is a flat 5.5% of Louisiana taxable net income, replacing a previous graduated rate structure that went up to 7.5%.
  • Apportionment: For multi-state corporations, Louisiana uses a single sales factor apportionment method to determine the amount of income subject to the tax.

Unique Business Taxes

Louisiana imposes specific taxes unique to its economy, particularly concerning its natural resources.

  • Severance Tax: This is a key tax on the privilege of extracting natural resources (such as oil, gas, timber, and salt) from the soil or water of the state. The rates are variable and dependent on the type and volume of the resource extracted.
  • Corporate Franchise Tax (Repealed): The state legislature passed a measure to repeal the corporate franchise tax for tax years beginning on or after January 1, 2025. Prior to this repeal, the tax was levied on the value of a corporation’s capital employed in Louisiana.

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.