DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part of the
legislative instrument. The keyword, one-liner, abstract, and digest do not constitute part of the law
or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 416 Engrossed 2019 Regular Session Ivey
Abstract: Changes the rates and brackets for purposes of calculating individual income tax liability
from a graduated rate system to a single flat rate of 4.15%; changes the rates and brackets
for purposes of calculating income tax liability for estates and trusts; modifies income tax
credits and deductions; and eliminates the deductibility of federal income taxes paid for both
individual and corporate income taxes.
Present law provides for a tax to be assessed, levied, collected, and paid upon the taxable income of
an individual at the following rates:
(1)2% on the first $12,500 of net income;
(2)4% on the next $37,500 of net income;
(3)6% on net income in excess of $50,000.
Proposed law removes the graduated schedule of rates in favor of a flat 4.15% individual income tax
rate.
Present law provides that in cases where taxpayers file a joint return of husband and wife, the
combined tax shall be twice the combined tax of single filers.
Proposed law retains present law.
Present law provides that all personal exemptions and deductions for dependents allowed in
determining federal income tax liability shall be allowed in determining La. tax liability. Further
provides for a combined personal exemption of $4,500 for single, individual filers, $9,000 for
married, joint filers, $4,500 for married, separate filers, and $9,000 for filers who are the head of
household.
Proposed law increases the combined personal exemption to $12,500 for single, individual and
married, separate filers. Also increases to $25,000 for combined personal exemption to married,
joint filers, qualified surviving spouses, and filers who are the head of household.
Present law authorizes a credit of $400 for each dependent who meets certain criteria.
Proposed law repeals present law in favor of a $1,000 deduction for each dependent as defined in present law.
Present law authorizes an additional deduction of $1,000 for each allowable exemption in excess of
those required to qualify for the exemption allowable under present law. (R.S. 47:294(A))
Present law requires the secretary to establish tax tables that calculate the tax owed by taxpayers
based upon where their taxable income falls within a range that does not exceed $250. Further
requires the secretary to provide in the tax tables the combined personal exemption, standard
deduction, and other exemption deductions in present law which is deducted from the 2% bracket.
If the combined exemptions and deductions exceed the 2% bracket, the excess is deducted from the
4% bracket, and then the 6% bracket.
Proposed law deletes the provisions authorizing the combined personal exemption, standard
deduction, and other exemption deductions to be deducted from the income tax brackets.
Present law authorizes a deduction from individual income taxes for excess federal itemized personal
deductions. The term "excess federal itemized personal deductions" is defined to mean the amount
by which the federal itemized personal deductions exceed the amount of federal standard deduction
designated for the filing status used for the taxable period on the individual income tax return.
Proposed law changes present law by prohibiting this deduction on the first $12,500 of excess federal
itemized personal deductions for single filers and $25,000 for taxpayers filing joint returns.
Proposed law also excludes state income taxes paid by a taxpayer from inclusion as a federal
itemized deduction for purposes of this state deduction.
Present law defines "tax table income" for resident individuals as the adjusted gross income plus
interest on certain state or political subdivision obligations less items such as gratuitous grants, loans,
or other disaster benefits included in federal adjusted gross income, federal income tax liability,
amount deposited into medical or educational savings accounts, and excess personal exemptions and
deductions.
Proposed law retains present law but adds to the list of income not included in "tax table income"
state income tax paid which are included in federal adjusted gross income.
Present constitution and present law authorize a state deduction for federal income taxes paid for
purposes of computing income taxes for the same period.
Proposed law repeals the present law provisions that authorize a state deduction for federal income
taxes paid for purposes of calculating individual and corporate income taxes and income taxes for
estates and trusts.
Present law provides for the computation of La. taxable income for a resident estate or trust,
including provisions for the federal income tax deduction, limitations of deductions for net income,
provisions for the federal deduction for alternative minimum tax, and the authority of the secretary
of the Dept. of Revenue to consider reductions to the federal income tax deduction and the determination of the deductible portion of an alternative minimum tax.
Present law provides for a tax to be assessed, levied, collected, and paid on the La. taxable income
of an estate or trust at the following rates:
(1)2% on the first $10,000 of La. taxable income.
(2)4% on the next $40,000 of La. taxable income.
(3)6% on La. taxable income in excess of $50,000.
Proposed law removes the graduated schedule of rates in favor of a flat 4.15% rate on taxable income
of an estate or trust.
Applicable to all taxable periods beginning on and after Jan. 1, 2020.
Effective on Jan. 1, 2020, if and when the proposed amendment of Article VII of the Constitution
of La. contained in the Act which originated as House Bill No. 441 of this 2019 R.S. of the
Legislature is adopted at a statewide election and becomes effective.
(Amends R.S. 47:32(A), 79, 93(B), 241, 287.69, 293(3), and (10), 294, 295(B), 300.1, 300.6(A), and
300.7(A); Adds R.S. 47:55(6) and 293(9)(a)(xviii); Repeals R.S. 47:55(5), 287.79, 287.83, 287.85,
287.442(B)(1), 293(4) and (9)(a)(ii), 296.1(B)(3)(c), and 298)
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the original
bill:
1. Increase the flat rate for individual income tax and the income tax for estates and trusts
from a flat 4% to a flat 4.15%.
2. Eliminate the federal income tax deduction for both individual and corporate income
taxes.
3. Change the exclusion from the definition of excess federal itemized personal deductions
from state income tax refunds to state income taxes paid.
4. Technical amendments.