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 278 Reengrossed 2021 Regular Session Bishop
Abstract: Reduces the rates for purposes of calculating individual income tax liability and the tax
liability of estates and trusts, eliminates the deduction for federal income taxes paid for
individuals and estates and trusts, and limits the deduction for excess federal itemized
personal deductions to certain medical care expenses.
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 reduces individual income tax rates as follows:
(1)From 2% to 1.85% on the first $12,500 of net income.
(2)From 4% to 3.5% on the next $37,500 of net income.
(3)From 6% to 4.25% on net income in excess of $50,000.
Proposed law requires the reduction in each individual income tax rate beginning Nov. 1, 2024, and
each November 1st thereafter, if the percentage change between the prior fiscal year's actual
individual income tax collections as reported in the state's accounting system on Oct. 1st and the
actual individual income tax collections for the fiscal year ending June 30th one year prior as
reported in the state's accounting system on Oct. 1st exceeds the current growth factor provided for
in present constitution.
Proposed law requires the amount of the reduction to be calculated by multiplying each rate by the
percentage change in individual income tax collections in excess of the growth factor as provided
in present constitution. Further prohibits this reduction unless both of the following conditions are
met:
(1)The percentage change between the actual tax, license, and fee collections as reported in the
state's accounting system on Oct. 1st for the fiscal year ending in the preceding June and the final actual tax, license, and fee collections for the immediately preceding fiscal year as
reported in the state's accounting system on Oct. 1st exceeds current growth factor provided
in present constitution.
(2)The Budget Stabilization Fund balance is at least 2.5% of the total state revenue receipts
from the prior fiscal year as reported by the treasurer to the Revenue Estimating Conference.
Proposed law requires the secretary of the Dept. of Revenue to publish the reduced rates and to
consider the rate reduction when publishing the tax tables and withholding tables in present law.
Proposed law requires the actual individual income tax collections and actual tax, license, and fee
collections used in the calculations required in proposed law to be certified by the Office of
Statewide Reporting and Accounting Policy.
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 the federal standard
deduction designated for the filing status used for the taxable period on the individual income tax
return.
Proposed law changes present law to limit the expenses eligible to be claimed on a state return to
expenses for medical care used by the taxpayer in the calculation of federal taxable income that
exceed the amount of the federal standard deduction.
Proposed law defines the term "expenses for medical care" to have the meaning ascribed to it in
federal law.
Present constitution and present law authorize a mandatory 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 income taxes.
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 are 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 changes present law by authorizing the combined personal exemption, standard
deduction, and other exemption deductions to be deducted from the lowest income tax bracket. If
the combined exemptions and deductions exceed the lowest bracket, the excess is deducted from the
next lowest bracket. 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 changes income tax rates on estates and trusts as follows:
(1)From 2% on the first $10,000 of La. taxable income to 1.85% on the first $10,000 of La.
taxable income.
(2)From 4% on the next $40,000 of La. taxable income to 3.5% on the next $40,000 of La.
taxable income.
(3)From 6% on La. taxable income in excess of $50,000 to 4.25% on La. taxable income in
excess of $50,000.
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.
Proposed law retains present law except as it applies to the deductibility of federal income taxes.
Provides that no federal income tax deduction is allowed on net income upon which no La. income
tax was incurred or upon which no income tax will be paid.
Proposed law is applicable to taxable periods beginning on or after Jan. 1, 2023.
Effective on Jan. 1, 2023, if the proposed amendment of Article VII of the Constitution of La.
contained in the Act which originated as House Bill No. 274 of this 2021 R.S. of the Legislature is
adopted at a statewide election and becomes effective.
(Amends R.S. 47:32(A), 241, 293(3) and (10), 295(B), 296.1(B)(3)(c) and (d), 300.1, 300.6(A), and
300.7(A); Adds R.S. 47:32.1; Repeals R.S. 47:293(4) and (9)(a)(ii), 296.1(B)(3)(e), and 298)
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the original
bill:
1. Specify the House Bill No. of the proposed constitutional amendment to which the effectiveness of proposed law is tied.
The House Floor Amendments to the engrossed bill:
1. Change the rate of the middle bracket for purposes of calculating individual income taxes
from 3.51% to 3.5% on the next $37,500 of net income.
2. Reduce the rate of the tax assessed, levied, collected, and paid on the La. taxable income
of an estate or trust to be consistent with the rates in proposed law for individual income
tax.
3. Eliminate the deduction for federal income taxes paid when computing income taxes for
estates and trusts.
4. Add provisions authorizing a reduction in the individual income tax rates beginning Nov.
1, 2024, based on actual individual income tax collections. Further requires the actual
income tax collections and actual tax, license, and fee collections to be certified by the
Office of Statewide Reporting and Accounting Policy. Provides conditions that must be
met for the reduction to be made.