The original instrument and the following digest, which constitutes no part of the
legislative instrument, were prepared by Leonore Heavey.
DIGEST
SB 223 Original 2019 Regular Session Allain
Present law requires Subchapter S corporations to pay Louisiana income tax using the corporate
income tax rate and bracket schedule as follows:
(1)4% on the first $25,000 of La. taxable income.
(2)5% on La. taxable income above $25,000 but not in excess of $50,000.
(3)6% on La. taxable income above $50,000 but not in excess of $100,000.
(4)7% on La. taxable income above $100,000 but not in excess of $200,000.
(5)8% on all La. taxable income in excess of $200,000.
Proposed law requires income from flow through entities such as limited liabilities companies that
elect federal partnership treatment and partnerships (referred to as "flow through entities") to be
reported on the partner or member's individual income tax return.
Proposed law provides an election that authorizes S corporations and other flow through entities to
file and pay tax on their Louisiana income as if they were C corporations.
Proposed law changes the Subchapter S corporation state income tax rates to the married individual
income tax rates and brackets for S corporations that elect to be taxed at the corporate level:
(1)2% on the first $25,000 of La. taxable income.
(2)4% on La. taxable income above $25,000 but not in excess of $100,000.
(3)6% on La. taxable income in excess of $100,000.
Proposed law applies the married individual income tax rates and brackets to the income of all flow
through entities that elect to be taxed as corporations for Louisiana tax purposes.
Present law provides a deduction for federal income tax paid on Louisiana income for the taxable
year.
Proposed law authorizes Subchapter S corporations and other flow through entities that elect to file
and pay Louisiana income tax as if they were a corporation a deduction for the amount of federal
income tax the entities would have paid on its Louisiana income if it had been taxed as a C corporation for federal income tax purposes.
Present law provides a corporation income tax exclusion for Subchapter S income that is reported
on a Louisiana individual resident or nonresident income tax return.
Proposed law retains present law Subchapter S exclusion for S corporations not making the proposed
law election and further provides an individual income tax exclusion for Louisiana Subchapter S
income and flow through entity income that is included in Louisiana individual income taxpayer's
federal adjusted gross income for that taxable year.
Present law requires individual income taxpayers to inform the secretary of revenue of federal
income tax adjustments.
Proposed law retains present law and requires individual income taxpayers who use the proposed
law S corporation and flow through entity exclusion to notify the secretary if changes are made to
their federal income tax return due to adjustments to an S corporation's income or losses.
Present law provides that credits earned by flow through entities shall flow through to partners or
members as provided in the operating agreement of the entity.
Proposed law provides that credits earned by flow through entities that have made the proposed law
election shall not flow through to the partners or members but shall be applied at the entity level.
Present law requires S corporations to use corporation income tax credits at the corporation level
unless the S corporation annually elects to flow corporation income tax credits to shareholders.
Proposed law retains the present law requiring S corporations to use credits at the corporation level
and ends the annual election to flow through credits on Jan. 1, 2019.
Proposed law applies to all taxable years beginning on or after Jan. 1, 2019.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Amends R.S. 47:287.732(B)(1), 293(10), and 1675(G); adds R.S. 47:287.732(B)(6), 287.732.2,
293(9)(a)(xviii), 297.14, and 1675(F)(4))