Louisiana lawmakers will meet in special session beginning on November 6, 2024, to consider a package of tax bills proposed by Governor Jeff Landry who wants to cut personal and corporate income taxes and pay for the reductions by eliminating many of the state’s tax exemptions, credits, and incentives and by broadening the state’s sales tax base to tax more services.
The session will convene at 3:00 p.m. on November 6 and end no later than November 25, according to the Governor’s proclamation signed on October 26. The proclamation lists 23 items lawmakers are to consider, most of which relate to the tax package that Revenue Secretary Richard Nelson has been discussing with state and parish leaders for several months. This will be the third special session of the year.
Drafts and analyses of the tax bills are posted on the Louisiana Department of Revenue’s (LDR’s) website. They include:
- Proposed amendments to the state’s Constitution, including a requirement that local taxing jurisdictions exempt prescription drugs from local sales tax, providing a local option property tax exemption for business inventory, and removing the revenue cap on severance tax allocations to local governments
- Expanding the state and local sales tax base to tax digital products and 40 new types of services (e.g., information services)
- Making the current 4.45% state sales tax rate permanent, continuing the 2% state sales tax on business utilities, eliminating several sales tax exemptions and exclusions, and reclassifying certain exclusions as exemptions
- Repealing the corporate franchise tax and corresponding incentives
- Establishing a flat 3.5% corporate income tax rate (current top rate is 7.5%) and eliminating several credits and incentives, such as the Rehabilitation of Historic Structures Tax Credit
- Establishing a flat 3% individual income tax rate (current top rate is 4.25%), increasing the standard deduction, and providing for future rate reductions based on economic growth
Legislators may now file bills for the special session, and the Legislative Fiscal Office may begin to analyze those bills for Fiscal Note estimates. While many of these bills may align with LDR’s proposed drafts, other tax reform bills may also emerge.
Comprehensive tax reform is ambitious, and we commend the Governor’s Office and LDR for spearheading this reform effort. Tax reform is much needed in Louisiana to provide simplicity and predictability for Louisiana taxpayers.
Ryan’s Louisiana specialists will monitor bills as they are introduced and provide feedback as needed. If taxpayers have any questions regarding the tax reform bills, please contact your Ryan tax professional.
TECHNICAL INFORMATION CONTACTS:
Susan Bittick
Principal
Ryan
512.476.0022
susan.bittick@ryan.com
Matt Zagotti
Principal
Ryan
225.334.0040
matt.zagotti@ryan.com
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