Is Louisiana a Tax-Friendly State?

Business owners and residents in West Monroe, LA have good reason to search the web for tax information.

In particular, local business owners and managers often sleuth the web to determine if Louisiana is a tax-friendly state, especially in the context of conducting business.

Is Louisiana a Tax-Friendly State? | Niswanger Law in West Monroe, LA. Image of the Louisiana state flag waving along with the national flag of the U.S.A. In the background, there is a clear sky.

Here’s the inside scoop on taxation in Louisiana as detailed by tax planning professionals of Niswanger Law.

Tax Planning for LLCs in Louisiana

Every business owner—and even prospective business owners—should understand the taxation of Louisiana and the federal government. Louisiana taxes LLCs (limited liability companies) similarly to how income is taxed in the context of federal law. 

For example, an LLC taxed as a corporation for federal income taxes will also be considered a corporation for Louisiana income taxes. Moreover, LLCs viewed as partnerships in the context of income tax in Louisiana (this is common) have been taxed similarly at the state and federal levels. 

The 2016 First Extraordinary Session’s Act 12 expanded the franchise tax to additional types of businesses. LLCs do not qualify as corporations for franchise tax periods that started before January 1, 2017. This means the Louisiana franchise tax does not apply to LLCs.

Our tax planning attorneys in Monroe, LA are here to help you understand the state’s taxation idiosyncrasies and plan accordingly. 

Income Tax in Louisiana

Let’s shift our attention to the much-discussed subject of income taxes. 

Income tax in Louisiana is lower than in most other states. The state’s income taxes are as follows:

  • Income tax of 1.85% for $12,500 or less of income
  • A low-income tax rate of $25,000 for joint filers
  • A 4.25% income tax ceiling on taxable income of $50,000 for individuals
  • An income tax ceiling of $100,000 for those filing jointly

 

Louisiana residents should be aware that personal income tax will decrease on April 1, 2024, and each subsequent April through 2034. The caveat is that the income tax rate reduction is only applicable if the previous tax collection of individual income tax surpasses the taxes collected for the fiscal year that culminated by the end of June 2019. 

There is a qualifier to this taxation nuance described above. The collected individual income tax is adjusted yearly by the state’s designated growth factor. Such a level of complexity necessitates the guidance of an experienced business tax planning attorney in Monroe, LA.

Sales Tax in Louisiana

The Pelican State has a state levy of 4.45%. However, individual jurisdictions can boost the levy up to 7%. 

Local taxes have the potential to apply to groceries. Yet, such staples of living are not inflated in price by a state tax.

It is fascinating to note that prescription drugs are not subjected to state tax, but local taxes have the potential to be applicable.

Furthermore, Louisiana taxes the purchase of automobiles and clothing.

What About Real Property Tax in Louisiana?

Property in Louisiana is relatively cheap, primarily because the state is sizable and lacks heavily populated metropolises. The icing on the cake is the state’s low property tax rate. 

As of the current year, the Louisiana median property tax rate is slightly more than $550 per $100,000 of assessed home value. 

Louisiana retirees are especially likely to be homeowners. The state’s retirees age 65+ who receive an adjusted gross income less than six figures are legally empowered to freeze their homestead value. 

However, the tax advantage is not available if enhancements greater than 25% of the building’s value are implemented.

Contact Niswanger Law Monroe for LA Tax Planning

Tax planning in Louisiana requires the expertise of an experienced attorney. The tax experts at Niswanger Law are here to help you save as much money as possible while remaining fully compliant with the subtle nuances of tax law.

Visit our office today at 3814 Cypress Street, West Monroe, LA 71291. You can also call us at (318) 953-0071 or complete this form to schedule a consultation.