Louisiana has just revamped its tax system and the changes that kick in next year could significantly impact residents’ wallets.

Led by Gov. Jeff Landry, this comprehensive reform is designed to simplify the state’s tax code and make Louisiana more competitive for businesses and families.

In an end-of-session address, Landry described the tax changes as historic, adding, “Today we have made generational change in this state. We now stand at the threshold of a new era for Louisiana.”

Here’s more of what you need to know.

New Louisiana flat tax

At the heart of this Louisiana tax reform is a flat 3% income tax rate, which replaces a tiered system with often complicated calculations.

This change could be welcome news for many residents.

• For example, according to an analysis by RESET Louisiana, if you are a Louisiana resident earning between $30,000 and $40,000 a year, you could save around $330 on your state taxes.
• If your income falls between $70,000 and $80,000, expect savings of about $550.
• And for those making over $140,000? You might find an extra $1,000 in your pocket when it’s time to file your state return.

And there’s more. The state standard deduction has nearly tripled for individuals and doubled for older adults, meaning some households with low income may not have to pay state income tax.

• Before the bill, Louisiana’s standard deduction was $4,500 for single filers and $9,000 for joint filers.
• Next year, those amounts jump to $12,500 for single filers and those married filing separately.
• For those married filing jointly, heads of households, and surviving spouses, the standard deduction rises to $25,000 in 2025.

Also, under the new tax reform bill, the retirement income exemption doubles from $6,000 to $12,000 and will be adjusted annually for inflation beginning in 2026.

As a result, more older adults in the state may be able to keep more of their retirement earnings tax-free.

However, remember that tax cuts like these come with a cost. This tax package offsets some of the cuts with increased state sales tax.

Louisiana sales tax hike

Louisiana will increase its state sales tax rate from 4.45% to 5% for five years beginning Jan. 1, 2025.

According to the Tax Foundation, that makes Louisiana’s combined state and local sales tax rate the highest in the nation. (In six years, 2030, the Louisiana state sales tax is scheduled to be reduced to 4.75%.)

As Kiplinger has reported, higher sales taxes generally mean consumers pay more at checkout, potentially reducing disposable income and altering shopping habits.

Critics argue that this sales tax increase places a heavier burden on residents with lower incomes, who spend more of their income on taxable goods and services.

Louisiana corporate tax changes

Meanwhile, businesses weren’t left out of the Louisiana tax cut equation.

• The corporate income tax rate is set to drop to a flat 5.5%, down from a steep 7.5%.
• The corporate franchise tax has also been eliminated for businesses with revenues exceeding $500 million.

Those changes are designed to attract more companies to the Pelican State which some supporters say could lead to job creation and economic growth.

Louisiana income tax: What does this mean for you?

So, what does all this mean for Louisianans?

Potentially More Money in Your Pocket: With lower income taxes, some residents will enjoy increased take-home pay.

Simplified Tax Filing: The flat rate means less time spent figuring out previously complicated state tax brackets.

Higher Prices Ahead: Due to the increased sales tax, prices on goods and services will be slightly higher.

And as Louisiana adapts, stay informed about how these tax changes could affect your finances and daily lives. If you’re unsure how a higher state standard deduction or flat state tax rate will impact your return, consult a trusted and qualified tax professional.

Related

The Arkansas Razorbacks (6-5, 3-4 SEC) jumped in the ESPN Football Power Index (FPI) following their 35-14 win Saturday over the Louisiana Tech Bulldogs at Razorback Stadium in Fayetteville.

After coming in at 32nd overall following their loss to Texas, the Razorbacks moved up three spots to No. 29 off the back of the win over Louisiana Tech in ESPN’s FPI this week.

Head coach Sam Pittman’s squad now has a 6.3-5.7 projected win total and has secured six wins for bowl eligibility. Arkansas, of course, no longer has a chance at winning the SEC or making the College Football Playoff, according to the FPI.

According to ESPN, Arkansas now has the 15th-highest SOS (strength of schedule) and the 26th-best remaining SOS. The Razorbacks also slot in at No. 33 in Game Control rank, which reflects the chance that an average Top 25 team would control games from start to end. Finally, Arkansas is No. 56 in average in-game win probability.

After 13 weeks of football, Arkansas dropped to No. 36 in the country in efficiency rankings, according to ESPN. This includes a 59.1 (No. 46) offensive rating.

The defensive rating moved up to 67.7 (No. 27) this week, and the special teams unit increased its rating to 45.2 (No. 87) after the Louisiana Tech game.

Compared to the rest of the SEC, the Razorbacks come in at No. 13 in the FPI just above Vanderbilt, Kentucky and Mississippi State. The Hogs are the same in the efficiency department, as they slot in at No. 13 in the SEC.

Arkansas’ next matchup will be on the road against No. 23 Missouri (8-3, 4-3 SEC), which ranks No. 33 in ESPN’s FPI with a 61.1 offensive efficiency (43rd) and 74.4 defensive efficiency (16th).

Per ESPN analytics, Arkansas has a 33.3% chance of beating Missouri this week.

The Razorbacks’ game against the Tigers will kick off at 2:30 p.m. CT at Memorial Stadium on Saturday. It will be broadcast on SEC Network.