Tax & Accounting News

Louisiana Eyes State Income Tax Ban

Louisiana Eyes State Income Tax Ban

The State of Louisiana is eyeing a ban on state income tax, similar to neighbors Florida and Texas.

New Orleans news station CBS 4 reported on the possibility, which is being spearheaded by Mandeville-based Representative Richard Nelson (R). Nelson has advised the state's House Ways and Means Committee to "make recommendations concerning eliminating individuals and corporate income tax."

Currently, Louisiana has graduated income tax rates, ranging from 1.85% for couples making under $25,000 per year to 4.25% for those making over $100,000 annually. 

The Bayou State's existing corporate income tax ranges from 3.50% to 7.50%. 

The biggest question for state lawmakers is how to make up the difference financially if a ban on state income tax is implemented. The Tax Foundation notes that "Louisiana has a 4.45% state sales tax rate, a max local sales tax rate of 7.00%, and an average combined state and local sales tax rate of 9.55%."

One option is to raise property tax or sales tax rates statewide, which is how both Florida and Texas deal with the issue at a state level. Both have sales tax rates around 6%, markedly higher than Louisiana's aforementioned 4.45% rate.

CBS 4 remarked that Nelson's request "is just beginning the discussion. You can expect lots of meetings and input before a radical change to Louisiana's tax code. But the Ways and Means Committee is the first stop if this idea is destined for legislative session this spring."

At this time, it is unknown when a ban on state income tax would go into effect in Louisiana should a bill ultimately pass.

Louisiana would become the ninth state without personal income tax, joining Wyoming, Washington, Texas, Tennessee, South Dakota, Nevada, Florida, and Alaska.

What do you think about Louisiana potentially banning state income tax?

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Rebekah Barton

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