Louisiana’s 2025 Regular Legislative Session adjourned sine dine on June 12th. While the session was a fiscal session, many other legislative priorities took the spotlight such as insurance reform and carbon capture regulation. Nevertheless, there were many key tax measures that taxpayers should be made aware.
Constitutional Amendments related to the former Constitutional Amendment No. 2.
At the beginning of session, legislators were unsure of how to proceed with the former Constitutional Amendment No. 2 (“CA 2”). One option was to do 109-page bill that closely resembled CA 2, without a few of the controversial provisions. The other option was to do single-item constitutional amendments that break out each part of CA 2. Both options were filed while the legislature decided the best course of action. Ultimately, the legislature decided to go with option two, and proceeded with single-item constitutional amendments. However, only two of the five constitutional amendments passed. Here are the constitutional amendments related to CA 2 that passed and a brief description of each:
- HB 366 by Representative Deshotel – Authorizes parishes to exempt business inventory from ad valorem taxes. Creates one-time payment from Revenue Stabilization Fund to each parish that elects to irrevocably exempt business inventory. Also authorizes parishes to reduce the fair market value percentage applicable to business inventory.
- HB 473 by Chairwoman Emerson – Repeals certain funds in the state treasury and applies the money from those funds to the Unfunded Accrued Liability of the Teachers’ Retirement System of Louisiana.
These constitutional amendments will be up for election at the statewide election on the April 18, 2026. Please note, these bills have statutory companions that passed that add additional clarity in statute.
The Homestead Exemption and Special Assessment Levels
There were many attempts by the legislature to increase the homestead exemption and to increase/remove the income limitation for persons that qualify for the special assessment level. In requesting support, bill authors argued that the amounts/limitations do not reflect the current economy and inflation. In opposition, many testified that the cost of these increases would be pushed on to businesses and taxpayers who do not qualify. All but one of these bills failed.
The one bill that passed the legislature was HB 300 by Representative Mack. If passed at the ballot, this constitutional amendment will increase the income limitation for persons who qualify for the special assessment level from $100,000 to $150,000. To address the opposition mentioned above, an amendment was added to the bill which requires local taxing authorities to absorb the cost of the increase and clarifies that the increase cannot create any additional tax liability for other taxpayers. This constitutional amendment will be up for election at the statewide election on November 3, 2026.
The Inventory Tax Credit
In the 2024 Special Session, the inventory tax credit for C-corps was repealed for tax periods beginning on or after July 1, 2026. The repeal of the credit was a hot topic this session. There were bills to postpone the repeal (HB 383 by Representative Brass), accelerate the repeal (SB 65 by Senator Foil), and even further restrict usage of the credit for other entities (Senator Luneau).
HB 383 by Representative Brass originally proposed to postpone the repeal of the credit and to phase the credit out over a 10-year period. This bill was then amended to phase out the credit over a two-year period. The was finally amended down to phase out the credit over one year. Throughout the session, business and industry affected by the repeal vehemently testified in support of the postponement. However, HB 383 did not leave the Senate floor, likely due to fiscal implications.
Sb 44 by Senator Luneau proposed to further restrict the credit for entities that are still eligible. This bill would have prohibited refundability of the credit for pass-through entities and unincorporated persons. Instead, the bill would allow for a 10-year carryforward period for credits that exceeded a taxpayer’s liability for the taxable year. After testimony in opposition from business associations, Senator Luneau voluntarily deferred SB 44 for the remainder of session.
SB 65 by Senator Foil implements a few changes to the inventory tax credit. First, the bill changes the repeal of the credit of C-corps from “taxable periods beginning July 1, 2026” to “payments of ad valorem taxes made on or after July 1, 2026.” This change has been interpreted to repeal the credit a full year earlier than what was passed in the Special Session. Additionally, the bill clarifies that the repeal extends to trusts and estates that are subject to the income tax on trusts and estates. The bill does extend the carryforward period for remaining credits from an additional five years to an additional ten years from the date the credits would have expired. Lastly, the bill clarifies that credits will be applied to state corporate income taxes unless an election to flow through the credits was made for the taxable period. This bill was signed by the President of the Senate and the Speaker of the House and will be sent to the governor.
Sales and Use Tax
There were a few changes to both the state and local sales and use tax code that taxpayers should be made aware. Specifically, a few of the bills revised legislation that passed in the Special Session.
Hb 578 by Representative Emerson has been coined the “Special Session Cleanup bill” as it does just that and more. Specifically, the bill makes technical changes to tax statutes amended in the Special Session, restores exemptions unintentionally repealed, clarifies current law, and adds additional exemptions. For more information on this bill, see [insert link to sales tax blog]. This bill was adopted by the House and Senate and will be sent to the governor.
SB 162 by Senator Reese also makes technical changes to the tax statutes amended in the Special Session. Additionally, the bill broadens the definition of “dealer” for the purposes of imposing sales and use tax to include anyone engaged in business in Louisiana through participation in the retail sales market within the state or who otherwise avails himself of the substantial privilege of carrying on business within the state, including through virtual or economic contacts. The bill also allows remote sellers claim the local vendor’s compensation deduction if a return is filed timely. Lastly, the bill provides that once a marketplace facilitator’s sales exceed $100,000 during a calendar year, they are deemed a dealer for all future sales. This bill was adopted by the House and Senate and will be sent to the governor.
SB 112 by Senator Jackson-Andrews restores the local vendor’s compensation deduction that was incidentally repealed in the Special Session. This is a deduction as compensation to dealers for accounting for and remitting local sales and use tax timely. This bill also extends the deduction remote sellers that timely file returns with the Remote Sellers Commission. This bill was sent to the governor and is now awaiting signature or the lapse of time for gubernatorial action.
In other news, a bill was passed to help unify the state and local tax bases. HB 654 by Representative Beaullieu requires all new sales and use tax exemptions, exclusions, credits, or rebates to apply to both the state and local sales tax bases. This is a goal that legislators have been trying to achieve for years. This bill was sent to the governor and is now awaiting signature or lapse of the time for gubernatorial action.
Taxation of S-Corporations
Louisiana may finally update its tax treatment of S-corps. Currently, Louisiana has an exclusion for S-corp income that was passed through to shareholders to be taxed at the individual level. Hb 567 by Representative Bacala repeals the exclusion and recognizes S-corps as pass through entities in the same manner as the federal government, with all income passed through to the shareholder. The bill also establishes sourcing rules, calculation methods, and filing requirements. Lastly, the bill authorizes the Department of Revenue to collect delinquent taxes owed by S-corp shareholders on S-corp income directly from the S-corp. This bill was sent to the governor and is now awaiting signature or lapse of the time for gubernatorial action.
Severance Tax Reform
During the Special Session, the legislature proposed severance tax reform legislation that did not pass. There were small details that needed to be worked out that prevented the reform package from timely progressing. As such, legislators made sure the reform would be ready for this session.
HB 600 by Representative Geymann reduces the severance tax rate from 12.5% to 6.5% on oil produced from wells completed after Jun 30, 2025. The bill also reduces special interest rates for oil and gas produced from incapable wells, stripper wells, inactive wells, and orphan wells. In comparison to other states, Louisiana currently has the highest severance tax rate in the nation. The intent is that this reduction will make the state more competitive to the industry.
To pay for the rate reduction in HB 600, HB 495 by Representative Geymann reduces the duration of the horizontal well exemption from 24 months to 18 months. Together, these bills are projected to be nearly revenue neutral with the hope that more industry coming into the state will ultimately increase revenue. Both of these bills have been sent to the governor and are pending signature or the lapse of time for gubernatorial action. Please note, these bills are legally tied to one another so both must be signed by the governor to be enacted.
HB 518 by Representative Geymann is the third bill in the severance tax package. This bill was requested by the Department of Revenue and the Department of Energy and Natural Resources to simplify the audit and reporting requirements for the horizontal well exemption and make technical changes to the relevant statutes. The DENR testified in committee that the audit language that passed in the Special Session was hard to report so they wanted to simply it and publish policy as needed. This bill was adopted by both the House and Seante and will be sent to the governor.
New LED Programs
In the Special Session, many LED programs such as Quality Jobs and Enterprise Zone were set to sunset. The intent was to establish new reimagined programs to boast Louisiana’s economic competitiveness in this session. After analyzing other state programs, the LED with the legislature came up with a new program and two new funds.
HB 507 by Chairwoman Emerson establishes the High Impact Jobs program which will incentivize qualifying companies to create jobs that pay above the parish average wage and offer a basic health benefits plan. The program will be a reimbursable grant based on the percentage of annualized wages paid for qualifying jobs. This bill was sent to the governor and is awaiting signature or the lapse of time for gubernatorial action.
HB 461 by Representative McFarland establishes and allocates funding to the Site Investment and Infrastructure Improvement Fund to support enhancements to sites across Louisiana for economic development purposes. This will be a discretionary fund for eligible improvements such as roads, sewer, gas, and other infrastructure. This bill deposits $150 million into the fund. The LED will promulgate rules and regulations regarding the fund. HB 461 was sent to the governor and is awaiting signature or the lapse of time for gubernatorial action.
SB 161 by Senator Mizell restructurers/reorganizes the Louisiana Department of Economic Development. Specifically, the bill consolidates LED into Office of Economic Development and changes the powers and authority of the LED. The bill also establishes LED Innovation Fund for use at the LED’s discretion. This fund has been coined the “deal closing” fund to attract economic development into the state. This bill was sent to the governor and is awaiting signature or the lapse of time for gubernatorial action.
For more information on these programs and funds, see [insert link to C&I post].
Administrative Changes
Lastly, there were a few administrative changes affecting state and local tax administration that passed the legislature. HB 500 by Representative Beaullieu authorizes a mediation option in response to a final sales and use tax assessment by a local collector. The hope is that this additional option will alleviate the caseload at the Board of Tax Appeals. Other states have adopted similar options. HB 416 by Representative Farnum prohibits class actions from being brought against the Department of Revenue. While it is not entirely clear why the Department brought this bill at this time, the Department testified in Committee that a class action is not the appropriate procedural vehicle for tax matters, and they wanted to codify such. Both of these bills have been sent to the governor and are awaiting signature or the lapse of time for gubernatorial action.
Please note, this is just a high-level summary of what happened this session. For additional information or analysis, please contact either Blaike Ordes at blaike-lee.ordes@advantous.com or Jason DeCuir at (225) 317-3345.