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 424 Reengrossed 2021 Regular Session McFarland
Abstract: Establishes $5,000 income tax deductions for a taxpayer who adopts a child who is in
foster care, a youth receiving extended foster care services, or certain infants who are less
than one year of age and establishes a nonrefundable income tax credit for donations a La.
taxpayer makes during a taxable year to qualifying foster care charitable organizations.
Proposed law provides for the establishment of an income tax deduction for a taxpayer who adopts
a child who is in foster care, as defined in present law (Children's Code Art. 603), or a youth
receiving extended foster care services pursuant to present law (R.S. 46:288.1 et seq.—Extended
Foster Care Program Act).
Proposed law provides for the establishment of an income tax deduction for a taxpayer who adopts
an infant who is unrelated to the taxpayer and who is less than one year of age through a private
agency or who adopts an infant who is unrelated to the taxpayer and who is less than one year of age
through an attorney. For purposes of proposed law, the age of the infant shall be determined at the
time of the adoption placement.
Proposed law provides that the amount of these deductions shall equal $5,000 and shall be applicable
in the year the adoption of the child becomes final. Prohibits the amount of the deduction from
exceeding the total taxable income of the taxpayer claiming the deduction and provides that the
deductions established in proposed law shall be in lieu of the dependency deduction authorized in
present law (R.S. 47:294).
Proposed law requires taxpayers claiming these deductions to maintain all records necessary to verify
the adoption and if requested, to provide the records to the Dept. of Revenue when filing the
taxpayer's tax return.
Proposed law authorizes the promulgation of rules in accordance with present law (Administrative
Procedure Act) to implement the provisions of proposed law, including rules related to the
submission of documentation when claiming these deductions.
Present law defines "tax table income" for resident individuals as 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,
amounts 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"
the deduction for adopting a foster child and the deduction for the private adoption of infants less
than one year of age.
Proposed law authorizes a nonrefundable income tax credit for donations a La. taxpayer makes
during a taxable year to qualifying foster care charitable organizations, hereinafter "foster care
organizations".
Proposed law provides that the amount of the credit is equal to the amount of the donation used by
the foster care organization to provide services to a qualified individual, or $50,000, whichever is
less. The total amount of credits granted pursuant to proposed law shall not exceed $500,000 per
calendar year.
Proposed law requires the credits to be granted on a first-come, first-served basis. If the total
amount of credits claimed in a calendar year exceeds the amount of tax credits authorized for that
year, the excess shall be treated as having been claimed on the first day of the subsequent year.
Proposed law authorizes a taxpayer to carry forward the amount of the tax credit not used as an offset
against the taxpayer's subsequent tax liability for a period not to exceed five taxable years.
Proposed law requires an organization that seeks to become a qualifying foster care charitable
organization to apply to the Dept. of Revenue (DOR) and provide certain information. Requires a
foster care organization to annually file a report with DOR.
Proposed law defines "Louisiana taxpayer" or "taxpayer" as a person who is required to file a La.
income tax return.
Proposed law defines "qualifying foster care charitable organization" or "foster care organization"
as an organization that meets all of the following criteria:
(1)Is exempt from federal income tax pursuant to federal law.
(2)Provides services to at least 25 qualified individuals each operating year.
(3)Spends at least 75% of its total budget on providing services to qualified individuals or
spends at least 75% of its funds budgeted for La. on providing services to qualified
individuals and the organization certifies to DOR that 100% of the donations it receives from
La. residents will be spent on providing services to qualified individuals.
(4)Is approved by DOR after applying as provided in proposed law.
Proposed law defines a "qualified individual" as a child in a foster care placement program
established by the Dept. of Children and Family Services.
Proposed law defines "services" as cash assistance, medical care, child care, food, clothing, shelter, job placement, and job-training services or any other assistance reasonably necessary to meet
immediate basic needs that are provided for a qualified individual and used in La.
Proposed law requires a qualified foster care charitable organization to issue a receipt to each person
from whom the foster care organization receives a donation. Requires the receipt to indicate the
actual amount of the taxpayer's donation that was used by the foster care organization to provide
services to qualified individuals. Requires a taxpayer to provide a copy of the receipt to DOR when
claiming the credit authorized by proposed law.
Proposed law is applicable to adoptions finalized on or after Jan. 1, 2022, and to donations made by
taxpayers to qualifying foster care charitable organizations on or after Jan. 1, 2022.
Effective Jan. 1, 2022.
(Adds R.S. 47:293(9)(a)(xx) and (xxi), 297.16, 297.17, and 6042)
Summary of Amendments Adopted by House
The House Floor Amendments to the original bill:
1. Establish an income tax deduction equal to $5,000 for a taxpayer who adopts an infant
who is unrelated to the taxpayer and who is less than one year of age through a private
agency or an attorney.
2. Authorize a nonrefundable income tax credit for donations a La. taxpayer makes during
a taxable year to qualifying foster care organizations. Provides for the amount of the
credit and the granting of credits on a first-come, first-served basis.
3. Establish requirements and limitations for applying for the credit, set forth information
required to be submitted to the Dept. of Revenue, establish definitions, and authorize the
Dept. of Revenue to promulgate rules to implement provisions of proposed law related
to the tax credit.
4. Clarify that the provisions of proposed law related to the tax credit shall be applicable
to donations made by taxpayers to qualifying foster care charitable organizations on or
after Jan. 1, 2022.