The Governor of Louisiana signed multiple tax reform bills into law on 4 December 2024, marking a significant tax reform in the state. The state is determined to eliminate uncompetitive taxes like the franchise and inventory taxes, and broaden tax bases by removing preferences and lowering rates.
Among them is corporation franchise tax, in which any corporation or entity taxed as a corporation for federal income tax purposes meeting any of the following provisions, must file a Louisiana corporation franchise tax return:
- Organized under the laws of Louisiana;
- Qualified to do business in this state or doing business in this state;
- Exercising or continuing the corporate charter within this state;
- Owning or using any of the corporate capital, plant, or other property in this state whether owned directly or indirectly by or through a partnership, joint venture, or any other business organization of which the domestic or foreign corporation is a related party.
The main bills are as follows:
- House Bill (HB) 2: Introduces a flat corporate income tax rate of 5.5%, effective 1 January 2025.
- House Bill (HB) 3: Eliminates the corporation franchise tax, currently set at USD 2.75 per USD 1,000, effective 1 January 2026.
- House Bill (HB) 8: Expands the sales and use tax to include certain digital products and services, starting 1 January 2025.
- House Bill (HB) 10: Adjusts tax rates by increasing the sales and use tax to 5% and introducing a flat personal income tax rate of 3%, both effective 1 January 2025. The sales and use tax rate is set to decrease to 4.75% after five years, in 2030.
