HLS 23RS-111 ORIGINAL
2023 Regular Session
HOUSE BILL NO. 363
BY REPRESENTATIVE NELSON
TAX/TAXATION: Phases-out the corporation income and franchise taxes and reduces the
amount of exemptions, deductions, and credits that may be claimed to reduce
corporate income and franchise tax liability
1 AN ACT
2To amend and reenact R.S. 47:287.11(A), 287.12, 601(B), (C)(2), and (D)(2), to enact R.S.
3 47:287.13, 601.3, and 611(C), and to repeal R.S. 47:601.1 and 601.2, relative to
4 corporate taxes; to provide for the rate of the corporate income tax; to provide for a
5 reduction and eventual elimination of the corporate income tax; to provide for the
6 rate of the corporate franchise tax; to provide for a reduction and eventual
7 elimination of the corporate franchise tax; to prohibit the levy of an initial corporate
8 franchise tax under certain circumstances; to provide for the claiming of corporate
9 income and franchise tax exemptions, deductions, and credits; to repeal the
10 automatic reduction in the corporate franchise tax rate under certain circumstances;
11 to provide for applicability; to provide for an effective date; and to provide for
12 related matters.
13Be it enacted by the Legislature of Louisiana:
14 Section 1. R.S. 47:287.11(A), 287.12, 601(B), (C)(2), and (D)(2) are hereby amended
15and reenacted and R.S. 47:287.13, 601.3, and 611(C) are hereby enacted to read as follows:
16 §287.11. Tax imposed
17 A.(1) For taxable years beginning prior to January 1, 2027, there There shall
18 be levied, collected, and paid for each taxable year a tax upon the Louisiana taxable
19 income of corporations and other entities taxed as corporations for federal income
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1 tax purposes, which entities shall be considered to be corporations for the purposes
2 of this Chapter only, other than insurance companies as hereinafter provided.
3 (2) For tax years beginning on or after January 1, 2027, no tax shall be
4 assessed, levied, collected, or paid upon the Louisiana taxable income of
5 corporations.
6 * * *
7 §287.12. Rates of tax
8 A. For taxable years beginning prior to January 1, 2024, the The tax to be
9 assessed, levied, collected, and paid upon the Louisiana taxable income of every
10 corporation shall be computed at the rate of:
11 (1) Three and one-half percent upon the first fifty thousand dollars of
12 Louisiana taxable income.
13 (2) Five and one-half percent on the amount of Louisiana taxable income
14 above fifty thousand dollars but not in excess of one hundred fifty thousand dollars.
15 (3) Seven and one-half percent on the amount of Louisiana taxable income
16 above one hundred fifty thousand dollars.
17 B. For taxable years beginning on or after January 1, 2024, but before
18 January 1, 2025, the tax to be assessed, levied, collected, and paid upon the
19 Louisiana taxable income of every corporation shall be computed at the rate of:
20 (1) Two and sixty-three one hundredths percent upon the first fifty thousand
21 dollars of Louisiana taxable income.
22 (2) Four and thirteen one hundredths percent upon the amount of Louisiana
23 taxable income above fifty thousand dollars but not in excess of one hundred fifty
24 thousand dollars.
25 (3) Five and sixty-three one hundredths percent on the amount of Louisiana
26 taxable income above one hundred fifty thousand dollars.
27 C. For taxable years beginning on or after January 1, 2025, but before
28 January 1, 2026, the tax to be assessed, levied, collected, and paid upon the
29 Louisiana taxable income of every corporation shall be computed at the rate of:
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HB NO. 363
1 (1) One and seventy-five one hundredths percent upon the first fifty thousand
2 dollars of Louisiana taxable income.
3 (2) Two and seventy-five one hundredths percent upon the amount of
4 Louisiana taxable income above fifty thousand dollars but not in excess of one
5 hundred fifty thousand dollars.
6 (3) Three and seventy-five one hundredths percent on the amount of
7 Louisiana taxable income above one hundred fifty thousand dollars.
8 D. For taxable years beginning on or after January 1, 2026, but before
9 January 1, 2027, the tax to be assessed, levied, collected, and paid upon the
10 Louisiana taxable income of every corporation shall be computed at the rate of:
11 (1) Eighty-eight one hundredths percent upon the first fifty thousand dollars
12 of Louisiana taxable income.
13 (2) One and thirty-eight one hundredths percent upon the amount of
14 Louisiana taxable income above fifty thousand dollars but not in excess of one
15 hundred fifty thousand dollars.
16 (3) One and eighty-eight one hundredths percent on the amount of Louisiana
17 taxable income above one hundred fifty thousand dollars.
18 E. For taxable years beginning on or after January 1, 2027, no tax shall be
19 assessed, levied, collected, or paid upon the Louisiana taxable income of any
20 corporation.
21 §287.13. Utilization of corporate income tax exemptions, deductions and credits;
22 limitations
23 The value of each exemption, deduction, and credit included in Chapter 26
24 of Title 25 of the Louisiana Revised Statutes of 1950; this Chapter, Chapters 3 and
25 5 of Subtitle V, and Chapters 1, 2, and 3 of Subtitle VII of this Title; and Chapters
26 21, 26, 39, and 39-C of Title 51 of the Louisiana Revised Statutes of 1950, claimed
27 on a tax return to limit the corporate income tax liability of a taxpayer shall be
28 reduced as follows:
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HB NO. 363
1 (1) For taxable years beginning on or after January 1, 2024, but before
2 January 1, 2025, the value of each exemption, deduction, and credit claimed on a tax
3 return to limit corporate income tax liability shall be reduced by twenty-five percent.
4 (2) For taxable years beginning on or after January 1, 2025, but before
5 January 1, 2026, the value of each exemption, deduction, and credit claimed on a tax
6 return to limit corporate income tax liability shall be reduced by fifty percent.
7 (3) For taxable years beginning on or after January 1, 2026, but before
8 January 1, 2027, the value of each exemption, deduction, and credit claimed on a tax
9 return to limit corporate income tax liability shall be reduced by seventy-five
10 percent.
11 (4) For taxable years beginning on or after January 1, 2027, the value of each
12 exemption, deduction, and credit claimed on a tax return to limit corporate income
13 tax liability shall be reduced by one hundred percent.
14 * * *
15 §601. Imposition of tax
16 * * *
17 B. It is the purpose of this Section to require the payment of this tax to the
18 state of Louisiana by domestic corporations for the right granted by the laws of this
19 state to exist as such an organization, and by both domestic and foreign corporations
20 for the enjoyment, under the protection of the laws of this state, of the powers, rights,
21 privileges, and immunities derived by reason of the corporate form of existence and
22 operation. The tax hereby imposed pursuant to the provisions of this Chapter shall
23 be in addition to all other taxes levied by any other statute.
24 C.
25 * * *
26 (2) The term "foreign corporation" shall mean and include all such business
27 organizations as hereinbefore described in this Paragraph (1) of this Subsection
28 which are organized under the laws of any other state, territory or district, or foreign
29 country.
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HB NO. 363
1 * * *
2 D.
3 * * *
4 (2) Except as otherwise provided in R.S. 47:601.1 or 601.2, for For taxable
5 periods beginning on or after January 1, 2023, the annual rate of tax shall be two
6 dollars and seventy-five cents tax levied on for each one thousand dollars of taxable
7 capital, or major fraction thereof, in excess of three hundred thousand dollars of
8 taxable capital. shall be at the following rates:
9 (a) For taxable years beginning on or after January 1, 2023, but before
10 January 1, 2024, two dollars and seventy-five cents.
11 (b) For taxable years beginning on or after January 1, 2024, but before
12 January 1, 2025, two dollars and six cents.
13 (c) For taxable years beginning on or after January 1, 2025, but before
14 January 1, 2026, one dollar and thirty-eight cents.
15 (d) For taxable years beginning on or after January 1, 2026, but before
16 January 1, 2027, sixty-nine cents.
17 (e) For taxable years beginning on or after January 1, 2027, no corporation
18 franchise tax shall be assessed, levied, or collected by the state nor paid by domestic
19 or foreign corporations on taxable capital.
20 §601.3. Utilization of corporate franchise tax exemptions, deductions, and credits;
21 limitations
22 The value of each exemption, deduction, and credit included in Chapter 26
23 of Title 25 of the Louisiana Revised Statutes of 1950; this Chapter, Chapters 3 and
24 5 of Subtitle V, and Chapters 1, 2, and 3 of Subtitle VII of this Title; and Chapters
25 21, 26, 39, and 39-C of Title 51 of the Louisiana Revised Statutes of 1950, claimed
26 on a tax return to limit the corporate franchise tax liability of a taxpayer shall be
27 reduced as follows:
28 (1) For taxable years beginning on or after January 1, 2024, but before
29 January 1, 2025, the value of each exemption, deduction, and credit claimed on a tax
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HB NO. 363
1 return to limit corporate franchise tax liability shall be reduced by twenty-five
2 percent.
3 (2) For taxable years beginning on or after January 1, 2025, but before
4 January 1, 2026, the value of each exemption, deduction, and credit claimed on a tax
5 return to limit corporate franchise tax liability shall be reduced by fifty percent.
6 (3) For taxable years beginning on or after January 1, 2026, but before
7 January 1, 2027, the value of each exemption, deduction, and credit claimed on a tax
8 return to limit corporate franchise tax liability shall be reduced by seventy-five
9 percent.
10 (4) For taxable years beginning on or after January 1, 2027, the value of each
11 exemption, deduction, and credit claimed on a tax return to limit corporate franchise
12 tax liability shall be reduced by one hundred percent.
13 * * *
14 §611. Newly taxable corporation
15 * * *
16 C. For taxable years beginning on or after January 1, 2027, no initial tax
17 shall be assessed, levied, or collected by the state nor paid by domestic or foreign
18 corporations.
19 Section 2. R.S. 47:601.1 and 601.2 are hereby repealed in their entirety.
20 Section 3. The provisions of this Act shall be applicable to corporate income and
21corporate franchise taxable periods beginning on or after January 1, 2024.
22 Section 4. This Act shall take effect and become operative if and when the proposed
23amendment of Article VII of the Constitution of Louisiana contained in the Act which
24originated as House Bill No. ___ of this 2023 Regular Session of the Legislature is adopted
25at a statewide election and becomes effective.
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HB NO. 363
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 363 Original 2023 Regular Session Nelson
Abstract: Phases-out corporate income and franchise taxes over four years, reduces the
amount of exemptions, deductions, and credits that may be claimed on tax returns
to reduce corporate income and franchise tax liability, and repeals the automatic
reduction in the corporate franchise rate if certain revenue thresholds are met.
Present law requires that the tax to be assessed, levied, collected, and paid on the La. taxable
income of every corporation to be computed at the following rates:
(1)3.5% on the first $50,000 of La. taxable income.
(2)5.5% on La. taxable income above $50,000 but not in excess of $150,000.
(3)7.5% on La. taxable income above $150,000.
Proposed law changes present law for taxable years beginning on or after Jan. 1, 2024, but
before Jan. 1, 2025, by reducing the tax rates as follows:
(1)From 3.5% to 2.63% on the first $50,000 of La. taxable income
(2)From 5.5% to 4.13% on La. taxable income above $50,000 but not in excess of
$150,000.
(3)From 7.5% to 4.63% on La. taxable income above $150,000.
Proposed law provides for the further reduction of corporate income tax rates beginning on
or after Jan. 1, 2025, but before Jan. 1, 2026, as follows:
(1)From 2.63% to 1.75% on the first $50,000 of La. taxable income
(2)From 4.13% to 2.75% on La. taxable income above $50,000 but not in excess of
$150,000.
(3)From 4.63% to 3.75% on La. taxable income above $150,000.
Proposed law provides for the further reduction of corporate income tax rates beginning on
or after Jan. 1, 2026, but before Jan. 1, 2027, as follows:
(1)From 1.75% to .88% on the first $50,000 of La. taxable income
(2)From 2.75% to 1.38% on La. taxable income above $50,000 but not in excess of
$150,000.
(3)From 3.75% to 1.88% on La. taxable income above $150,000.
Proposed law prohibits tax from being assessed, levied, collected, or paid on the La. taxable
income of any corporation for tax years beginning on or after Jan. 1, 2027.
Present law levies the corporation franchise tax on a corporation when any of the following
occurs:
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(1)An organization does business within this state in a corporate form.
(2)A corporation exercises its charter or the continuance of its charter within La.
(3)An entity owns or uses part or all of its capital, plant, or other property in La. in a
corporate capacity.
Present law provides, beginning Jan. 1, 2023, that the rate of the tax shall be $2.75 per
$1,000 of taxable capital above $300,000.
Proposed law provides for a four-year phase-out of the corporate franchise tax by reducing
the tax rate levied on each $1,000 of taxable capital, or major fraction thereof, in excess of
$300,000 as follows:
(1)For taxable years beginning on or after Jan. 1, 2024, and before Jan. 1, 2025, from
$2.75 to $2.06.
(2)For taxable years beginning on or after Jan. 1, 2025, and before Jan. 1, 2026, from
$2.06 to $1.38.
(3)For taxable years beginning on or after Jan. 1, 2026, and before Jan. 1, 2027, from
$1.38 to $0.69.
(4)For taxable years beginning on or after Jan. 1, 2027, no corporation franchise tax
shall be assessed, levied, or collected by the state nor paid by domestic or foreign
corporations on taxable capital.
Present law provides for the determination of taxable capital for purposes of levying the
corporation franchise tax as well as the tax treatment of capital stock, surplus and undivided
profits, and the allocation of taxable capital. Present law further provides for the
administration of the tax as well as the collection and payment of the tax.
Present law requires every corporation or other entity subject to the franchise tax to pay only
an initial tax of $110 in the first accounting period in which it becomes subject to the tax.
After the first closing of the corporate books, the tax is payable as provided in present law.
Proposed law provides that no initial tax shall be levied or collected by the state nor paid by
domestic or foreign corporations for taxable years beginning on or after Jan. 1, 2027.
Present law includes various tax incentives in the form of credits, deductions and
exemptions from corporate income and franchise taxes which reduce a taxpayer's overall tax
liability.
Proposed law retains present law but reduces the overall value of the amount of tax credits,
deductions, and exemptions that may be claimed on a tax return to reduce a taxpayer's
corporate income or franchise tax liability as follows:
(1)For taxable years beginning on or after Jan. 1, 2024, but before Jan. 1, 2025, by 25%.
(2)For taxable years beginning on or after Jan. 1, 2025, but before Jan. 1, 2026, by 50%.
(3)For taxable years beginning on or after Jan. 1, 2026, but before Jan. 1, 2027, by 75%.
(4)For taxable years beginning on or after Jan. 1, 2027, by 100%.
Present law suspends the state corporation franchise tax levied on corporations at the rate
of $1.50 for each $1,000 of taxable capital, or major fraction thereof, on the first $300,000
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for small business corporations that have taxable capital of $1M or less for franchise tax
periods beginning between July 1, 2020, and July 1, 2023.
Proposed law repeals present law.
Present law requires the reduction of the corporate franchise tax rate if, beginning April
1, 2024, and each April first thereafter the prior fiscal year's actual corporate income and
franchise tax collections as reported in the state's accounting system exceed the actual
corporate income and franchise tax collections for the fiscal year ending June 30, 2019,
adjusted annually by the growth factor provided for in existing constitution. If the
conditions in present law are met, corporate franchise tax rates are reduced beginning the
following January first.
Present law requires the reduced rate to be calculated by multiplying the current rate by the
difference between one and the percentage change in corporate income and franchise tax
collections in excess of the corporate income and franchise tax collections for Fiscal Year
2018-2019 adjusted annually by the growth factor as provided for in present constitution.
Further prohibits this reduction unless both of the following conditions are met:
(1)The prior fiscal year's actual total tax, licenses, and fees exceed the actual total tax,
licenses, and fees for Fiscal Year 2018-2019, adjusted annually by the growth factor
provided for in existing constitution.
(2)The Budget Stabilization Fund balance as determined by the treasurer is at least 2.5%
of the total state revenue receipts from the prior fiscal year.
Proposed law repeals present law.
Proposed law applies to all corporate income and corporate franchise taxable periods
beginning on or after Jan. 1, 2024.
Effective if and when the proposed amendment of Article VII of the Constitution of La.
contained in the Act which originated as House Bill No. ___ of this 2023 R.S. of the
Legislature is adopted at a statewide election and becomes effective.
(Amends R.S. 47:287.11(A), 287.12, 601(B), (C)(2), and (D)(2); Adds R.S. 47:287.13,
601.3, and 611(C); Repeals R.S. 47:601.1 and 601.2)
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