Louisiana completed one of the biggest tax overhauls in the country in late 2024. Starting in 2025, the state replaced its graduated income taxes with a flat 3% personal rate and a flat 5.5% corporate rate, and it repealed the corporate franchise tax from 2026. To pay for the cuts, the state sales tax rate rose to 5%. Louisiana's local sales taxes remain among the highest and most complex in the country.
This guide covers Louisiana's business taxes for 2026, including the new rates, the parish sales tax system and the inventory tax.
Louisiana business taxes at a glance
For most small businesses, the 2025 reform is good news. A pass-through owner now pays a flat 3% on profit after a $12,500 standard deduction, compared with up to 4.25% before. A C corporation pays a flat 5.5% instead of up to 7.5% and no longer pays franchise tax on its capital. Customers pay a higher state sales tax of 5%, plus parish and municipal taxes that push combined rates above 10% in much of the state. Formation and annual report fees remain low. The biggest compliance challenge is sales tax, which is collected by both the state and each parish.
Corporate income tax
Louisiana taxes C corporations at a flat 5.5% of Louisiana taxable income from 2025. Before the reform, corporations paid 3.5% to 7.5%.
- Federal income tax deduction: Louisiana previously let corporations deduct federal income tax paid. That deduction ended with the move to a flat rate.
- Apportionment: Single sales factor for most businesses.
- Credits: Louisiana has scaled back many credits as part of the reform, but programs such as Quality Jobs and the Industrial Tax Exemption Program (ITEP) for local property tax remain.
- Returns: Form CIFT-620 is due on the 15th day of the fourth month after year-end.
Franchise tax repeal
Louisiana's corporate franchise tax was charged on capital employed in the state, at $2.75 per $1,000 above the first $300,000. It was repealed for tax periods beginning on or after January 1, 2026. Corporations still owe franchise tax for earlier periods, but from 2026 they pay only income tax. LLCs never paid the franchise tax unless they elected corporate treatment.
Personal income tax and pass-through owners
| Item | 2026 |
|---|---|
| Personal income tax rate | 3% flat |
| Standard deduction (single) | $12,500 |
| Retirement income exclusion (age 65+) | Up to $12,000 |
- LLC owners, partners and sole proprietors pay 3% on profit.
- S corporation shareholders pay on their share.
- Entity-level election: Louisiana lets S corporations and partnerships elect to pay tax at the entity level, which helps owners deduct state tax federally.
Sales and use tax
Louisiana's sales tax system is one of the most complex in the United States.
| Component | Rate |
|---|---|
| State sales tax | 5% (scheduled to fall to 4.75% in 2030) |
| Parish and municipal taxes | Typically 4% to 7% |
| Average combined rate | About 10.13% |
- Local collection: Each parish has a local tax collector, and businesses may need to register and file with each one where they make sales. The Louisiana Uniform Local Sales Tax Board and an online parish e-file portal simplify some filings.
- Remote sellers: Out-of-state sellers above $100,000 in Louisiana sales register with the Louisiana Sales and Use Tax Commission for Remote Sellers and pay a combined state and local rate.
- Digital products: From 2025, Louisiana taxes digital products such as downloaded software, streaming services and digital books.
- Groceries are exempt from the state tax but subject to local taxes in many parishes.
Payroll and property taxes
- Unemployment insurance: Employers pay on the first $7,700 of each employee's wages. New employers start at a rate based on their industry average.
- Property tax: Commercial property is assessed at 15% of market value for buildings and land at 10%, with millages set locally. Business inventory and equipment are taxed locally, with a state income tax credit for inventory taxes.
- ITEP: Manufacturers can apply for local property tax abatements of up to 80% for ten years on new investment, subject to local approval.
Forming a business in Louisiana: fees and ongoing costs
| Item | LLC | Corporation |
|---|---|---|
| Formation filing fee | About $125 | About $95 |
| Annual report | $35 | $35 |
| Franchise tax | None | Repealed from 2026 |
| Registered agent | Required | Required |
Worked example: $500,000 of profit
| Step | Amount |
|---|---|
| Taxable income | $500,000 |
| Louisiana corporate tax at 5.5% | $27,500 |
| Federal tax at 21% on $472,500 | $99,225 |
| Total income tax | $126,725 (25.3%) |
For a single LLC owner with $150,000 of Louisiana income, state tax is about $4,500 before the standard deduction (about $4,125 after it). At $75,000 it is about $2,250 before the deduction.
How Louisiana compares with its neighbors
| State | Corporate rate | Top personal rate | State sales tax |
|---|---|---|---|
| Louisiana | 5.5% | 3% | 5% |
| Texas | Franchise (margin) tax | None | 6.25% |
| Arkansas | 4.3% | 3.9% | 6.5% |
| Mississippi | 5% | 4% | 7% |
The reform moved Louisiana's personal income tax below Arkansas's and Mississippi's. Texas still has no personal income tax, but its franchise tax applies to LLCs with revenue above $2.65 million, while Louisiana LLCs owe no entity-level tax.
Choosing an entity in Louisiana
- LLC: Low fees, no franchise tax and a 3% rate for owners.
- S corporation: Same 3% for owners, with federal payroll tax savings.
- C corporation: 5.5% at the state level plus 21% federally. With the franchise tax gone, corporations are cheaper to run than before 2026.
Tax planning tips for Louisiana businesses
Map your parish sales tax obligations. If you deliver goods to customers in many parishes, you may owe local tax in each. Use the parish e-file system and keep parish-level sales records. Audits by local collectors are common and can be aggressive.
Claim the inventory tax credit. Businesses paying local property tax on inventory can claim a state income tax credit for those payments. Large credits may be refundable or carried forward, depending on the size of the business.
Revisit your credits after the reform. Several credits were reduced or repealed in 2025. Businesses relying on older credit programs should check their carryforwards and whether new projects still qualify.
Recent changes for 2025 and 2026
- Flat 3% personal and 5.5% corporate tax from 2025.
- Corporate franchise tax repealed from 2026.
- State sales tax raised to 5% through 2029, with digital products added to the base.
- Federal income tax deduction eliminated for individuals and corporations.
Is Louisiana a good state for business?
Advantages
- Low flat income tax rates after the 2025 reform
- No corporate franchise tax from 2026
- Low formation and annual report fees
- Strong energy, petrochemical, port and shipping industries
Drawbacks
- Among the highest combined sales tax rates in the country
- Separate parish-level sales tax administration
- Local inventory tax
- Hurricane and flood risk raises insurance costs
Compliance checklist
- File Articles of Organization or Incorporation with the Secretary of State.
- Register with the Louisiana Department of Revenue for sales tax, withholding and income tax.
- Register with each parish sales tax collector where you make sales.
- Register with the Louisiana Workforce Commission for unemployment insurance if you hire.
- File the annual report with the Secretary of State.
- File Form CIFT-620 (corporations) or the appropriate pass-through returns.
Compare Louisiana with its neighbors below or estimate your taxes in the United States calculator. See Corporation taxes for more.