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 1 Engrossed 2024 Third Extraordinary Session Emerson
Abstract: Changes the rates and brackets for purposes of calculating income tax for individuals,
estates, and trusts from a graduated rate system to a single flat rate of 3%; increases the
standard deduction; and modifies or repeals certain income tax credits and deductions.
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)1.85% on the first $12,500 of net income.
(2)3.5% on the next $37,500 of net income.
(3)4.25% on net income in excess of $50,000.
Proposed law removes the graduated schedule of rates and brackets in favor of a flat 3% 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 repeals present law.
Present law requires the automatic reduction in each individual income tax rate if, beginning Jan.
1, 2024, and each Jan. 1st thereafter through 2034, the prior fiscal year's actual individual income
tax collections as reported in the state's accounting system exceed the actual individual income tax
collections for the fiscal year ending June 30, 2019, adjusted annually by a growth factor. If the
conditions in present law are met, individual income tax rates shall be reduced beginning the
following January first. Further requires the reduced rate to be calculated by multiplying each
current rate by the difference between one and the percentage change in individual income tax
collections in excess of the individual income tax collections for Fiscal Year 2018-2019 adjusted
annually by the growth factor as provided for in existing constitution.
Proposed law changes present law by requiring the automatic reduction in the income tax rate
beginning Oct. 1, 2025, and each Oct. first thereafter if the prior fiscal year's actual general fund
revenues exceed the base year revenues as determined by the secretary of the Dept. of Revenue
(hereinafter "secretary"). Further provides that the rate shall be reduced by .25% for each multiple
of $374M by which the prior fiscal year's actual general fund revenues exceed the base year revenues. For purposes of this rate reduction, "base year revenues" is defined as $12,155,100,000
and "actual general fund revenues" is defined as the actual state general fund direct revenue
collections, plus any revenues dedicated to funds enacted after Jan. 1, 2025, that would have been
credited to the state general fund pursuant to the law in effect on Jan. 1, 2025.
Proposed law requires both the $374M and $12,155,100,000 amounts to be adjusted annually
beginning Oct. 1, 2027, by an amount equal to the average annual increase in the Consumer Price
Index (CPI) for all urban consumers, as published by the U.S. Dept. of Labor, for the previous
calendar year, as calculated by the secretary.
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 changes present law by increasing the combined personal exemption to $12,500 for
single, individual and married, separate filers. Also increases to $25,000 the combined personal
exemption for married, joint filers, qualified surviving spouses, and filers who are the head of
household. Further requires the amount of these exemptions to be adjusted annually beginning Jan.
1, 2026, by an amount equal to the average annual increase in the CPI for all urban consumers, as
published by the U.S. Dept. of Labor, for the previous calendar year, as calculated by the secretary.
Present law authorizes a credit of $400 for each dependent who meets certain criteria and 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)).
Proposed law repeals present law.
Present law requires the secretary of the Dept. of Revenue 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. Proposed law removes requirement that the range not exceed $250.
Present law 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 repeals present law.
Present law authorizes an S corporation or entity taxed as a partnership for federal income tax
purposes to elect to be taxed and to comply with requirements of present law as if the entity had been
required to file an income tax return with the I.R.S. as a C corporation. S corporations that make this
election shall not be eligible for the S corporation exclusion provided in present law. Further
provides that the tax levied on the La. taxable income of every entity that makes this election shall be computed at the following rates:
(1)1.85% on the first $25,000 of La. taxable income.
(2)3.5% on La. taxable income above $25,000 but not in excess of $100,000.
(3)4.25% on La. taxable income above $100,000.
Proposed law changes present law to remove the graduated schedule of rates and brackets in favor
of a flat 3% income tax rate levied for individuals.
Present law exempts $6,000 of annual pension or annuity income received by an individual 65 years
of age or older from state income taxation.
Proposed law increases the amount of annual pension or annuity income exempt from income
taxation from $6,000 to $12,000 and further requires the amount of the exemption to be adjusted
annually beginning Jan. 1, 2026, by an amount equal to the average annual increase in the CPI for
all urban consumers, as published by the U.S. Dept. of Labor, for the previous calendar year, as
calculated by the secretary.
Proposed law authorizes, beginning Jan. 1, 2025, a bonus depreciation deduction for qualified
property or qualified improvement property and a bonus amortization deduction for research and
experimental expenditures, at the election of the taxpayer, for costs of qualified property, qualified
improvement property, and research and experimental expenditures. "Bonus depreciation" and
"bonus amortization" mean methods to recover costs for expenditures in depreciable or amortizable
business assets by immediately deducting the cost of the expenditures in the tax year in which the
property is placed in service or the expenditure is paid or incurred.
Proposed law prohibits any depreciation claimed from duplicating any depreciation or bonus
depreciation allowable on the federal income tax return of the taxpayer for the taxable year.
Proposed law requires federal adjusted gross income to be increased by the amount of depreciation
or amortization claimed under the Internal Revenue Code (IRC) for the qualified property, qualified
improvement, and research and experimental expenditures for which bonus depreciation has been
claimed for taxable periods subsequent to the tax year in which the election has been made.
Prohibits proposed law from being construed to allow as an expense the excess of 100% of the cost
of property or expenditures.
Present law authorizes a deduction, for purposes of calculating tax table income for resident and
nonresident individuals, for income from net capital gains, which is limited to gains recognized and
treated for federal income tax purposes as arising from the sale or exchange of an equity interest in
or substantially all of the assets of certain businesses domiciled in La. The deduction is limited to
sales or exchanges of equity interests in or assets of a nonpublicly traded business that the taxpayer
has held for a minimum of five years immediately prior to the sale or exchange. The amount of the
deduction is based on the amount of time the equity interest was held by the taxpayer. Present law
requires the Dept of Revenue to promulgate rules relative to the deduction in order to reduce administrative requirements for eligible taxpayers.
Proposed law repeals present law.
Present law establishes deductions from tax table income for a taxpayer who adopts a child who is
in foster care or a youth receiving extended foster care services pursuant to the Extended Foster Care
Program Act or who adopts an infant who is unrelated to the taxpayer and who is less than one year
of age through a private agency or adopts an infant who is unrelated to the taxpayer and who is less
than one year of age through an attorney. The amount of these deductions are $5,000 and shall be
applicable in the year the adoption becomes final. Present law provides that these deductions are in
lieu of the dependency deductions otherwise provided for in present law.
Proposed law retains present law as it relates to the deductions but repeals the limitation that these
deductions are in lieu of the dependency deductions otherwise provided for in present law.
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 3% rate on taxable income
of an estate or trust.
Present law authorizes a nonrefundable income or franchise tax credit for businesses that hire
participants in the work release programs established pursuant to present law. The amount of the
credit shall be equal to 5% of the total wages paid to an eligible reentrant in an eligible job for 12
consecutive months following the release of the eligible reentrant from imprisonment. The total
amount of tax credits granted to any eligible business shall not exceed $2,500 per eligible reentrant.
Proposed law prohibits credits from being granted after June 30, 2027.
Proposed law retains present law but accelerates termination for granting credits from after June 30,
2027, to certifications requested after June 30, 2025.
Present law authorizes the Board of Commerce and Industry, with approval of the governor, to enter
into exemption contracts with manufacturing establishments, headquarters, or warehousing and distribution establishments seeking such exemption if requirements of present law are met regarding
the location of the entity seeking the exemption for tax equalization.
Proposed law prohibits the Board of Commerce and Industry from entering into any exemption
contract on or after June 30, 2025, and prohibits the Board of Commerce and Industry from
renegotiating or approving the renewal of an existing contract after June 30, 2025.
Present law authorizes the following tax credits for state-certified motion picture productions:
(1)A 25% tax credit if the base investment is in excess of $300,000 or if the production is a La.
screenplay production.
(2)An additional 5% base investment credit for projects filmed outside the New Orleans Metro
Zone, but not including St. John the Baptist Parish.
(3)An additional 10% base investment credit for certain expenditures equal to or greater than
$50,000 but less than $5 million for projects meeting certain La. screenplay criteria.
(4)A 15% credit for La. resident payroll expenditures.
(5)A 5% credit for certain La.-based visual effects expenditures meeting certain requirements.
Present law prohibits credits for applications received on or after July 1, 2031.
Proposed law retains present law but accelerates termination of the motion picture production tax
credit from applications received on or after July 1, 2031, to applications received after June 30,
2025.
Present law authorizes an income and corporation franchise tax credit for certain taxpayers who
employ 50 or more persons and claim a federal income tax credit for increasing research activities.
This tax credit is also available for taxpayers who employ fewer than 50 employees if the employer
meets certain eligibility requirements.
Present law authorizes an additional tax credit for taxpayers who receive a federal Small Business
Innovation Research (SBIR) grant or contract and Phase I or Phase II grants or contracts from the
Federal Small Business Technology Transfer (SBTT) program equal to 30% of the award received
during the tax year.
Present law prohibits tax credits for research expenditures incurred, SBTT Program funds received,
or SBIR Grant funds received after Dec. 31, 2029.
Proposed law retains present law but accelerates the termination date for granting credits for research
expenditures incurred, SBTT Program funds received, or SBIR Grant funds received after Dec. 31,
2029, to applications received after June 30, 2025. Present law authorizes a tax preference known commonly as the "rehabilitation of historic structures
tax credit" which provides a credit against income and corporation franchise tax for the amount of
eligible costs and expenses incurred during the rehabilitation of a historic structure that meets
qualifications provided in present law. The amount of the credit shall equal 25% of the eligible costs
and expenses of the rehabilitation incurred on or after Jan. 1, 2023, and before Jan. 1, 2029,
regardless of the year the property is placed in service. For the rehabilitation of a historic structure
located in a rural area, the amount of the credit shall equal 35% of the eligible costs and expenses
of the rehabilitation incurred on or after Jan. 1, 2023, and before Jan. 1, 2029.
Present law prohibits the issuance of a credit for expenses incurred on or after Jan. 1, 2029.
Proposed law retains present law but accelerates termination of the credit for Part I applications
received after June 30, 2025.
Present law establishes the Angel Investor Tax Credit program which authorizes a 25% income or
corporate franchise tax credit on investments in La. small businesses that are certified by La.
Economic Development as "Louisiana Entrepreneurial Businesses."
Present law limits the total amount of credits granted under the program to $3.6 million per year but
authorizes the department to carry forward residual unused credits in any calendar year to subsequent
calendar years without regard to the annual credit cap. Prohibits credits from being granted or
reserved for applications received by the Dept. of Economic Development on or after July 1, 2030.
Proposed law retains present law but accelerates the termination date for granting or reserving credits
from on or after July 1, 2030, to after June 30, 2025.
Present law authorizes an income or franchise tax credit for applications for state-certified digital
media productions submitted to the office of entertainment industry development on or after July 1,
2017, and subsequently approved by the office and secretary, that shall be earned by a company at
the time funds are expended in La on a state-certified production. The amount of the credit shall be
equal to 18% of the base investment and an additional 7% tax credit to the extent the base investment
is expended on payroll for La. residents employed in connection with a state-certified production.
Proposed law retains present law but terminates the credit beginning July 1, 2025 and prohibits
credits from being granted for applications received after June 30, 2025.
Present law authorizes a state income tax credit for investments made in state-certified sound
recording productions until July 1, 2026. The tax credit is earned by investors at the time
expenditures are certified by the Dept. of Economic Development (LED) according to the total base
investment certified for the sound recording production company per calendar year. The aggregate
amount of credits that can be certified each year is limited to $2,160,000; however, 50% of the
credits certified each year shall be reserved for qualified music companies (QMC).
Present law provides that the amount of the credit for each investor for state-certified productions
received on or after July 1, 2017, is 18% of the base investment made by that investor in excess of $25,000 or, if a resident of this state, in excess of $10,000. Present law provides for the following
additional tax credits for state-certified productions:
(1)QMC Tier 1 payroll credit of 10% for each new job with a salary of $35,000 through $66,000
per year.
(2)QMC Tier 2 payroll credit of 15% for each new job with a salary of $66,000 but not more
than $200,000.
(3)Additional 10% increase in the base amount if the base investment is expended by a QMC
on a sound recording of a resident copyright.
Proposed law prohibits credits from being allowed or granted for applications received on or after
July 1, 2025. Otherwise retains present law.
Present law provides for the Enterprise Zone Program under which the Board of Commerce and
Industry can enter into contracts after consultation with the secretary of LED and the secretary of the
Dept. of Revenue with qualified applicants for rebates of state and local sales and use tax or a
refundable investment income tax credit equal to 1.5% of the amount of qualified expenditures.
Present law prohibits LED from accepting new advance notifications for the Enterprise Zone
Program on or after July 1, 2026.
Proposed law retains present law but changes the deadline for LED to accept new advance
notifications from on or after July 1, 2026, to on or after July 1, 2025.
Present law authorizes an employer to earn and apply for a refundable credit on any income or
corporation franchise tax liability in the amount approved by the secretary of LED for qualified
expenditures incurred by the employer for a modernization pursuant to the Retention and
Modernization Act. Further provides that for credits approved on and after July 1, 2017, the amount
of the credit granted shall be 4% of the amount of qualified expenditures incurred by the employer
for modernization with the credit divided in equal portions for five years. The total amount of
modernization tax credits granted in any calendar year shall not exceed $7.2M regardless of the year
in which the credit is claimed.
A retention and modernization tax credit shall expire and have no value or effect on tax liability
beginning with the eleventh tax year after the tax year in which it was originally granted.
Proposed law retains present law but adds a termination date for the credit by prohibiting credits
from being issued for applications received after June 30, 2025.
Present law provides for the La. Quality Jobs Program under which LED can enter into contracts
with qualified applicants for rebates of sales and use tax and an investment tax credit. Present law
prohibits new advance notifications for the Quality Jobs Program to be accepted by LED after June
30, 2026. Proposed law retains present law but changes the deadline for LED to accept new advance
notifications for the Quality Jobs Program from after June 30, 2026, to after June 30, 2025.
Proposed law repeals the following income tax deductions and credits:
(1)Deduction for expenses disallowed by I.R.C. Section 280C. (R.S. 47:293(9)(a)(ix))
(2)Deduction for taxpayers or dependents who are deaf, blind, mentally incapacitated, or who
have lost the use of one or more limbs. (R.S. 47:297(A))
(3)Tax credit for the elderly, a credit for contributions to candidates for public office, an
investment credit, a credit for foreign tax, a work incentive credit, jobs credit, and residential
energy credit. (R.S. 47:297(B))
(4)Tax credit for state gasoline, motor fuel, and special fuels taxes paid for the operation of a
commercial fishing boat. (R.S. 47:297(C))
(5)Tax credit for educational expenses incurred before Jan. 1, 2017, for each child attending
kindergarten, elementary, or secondary school through the 12
th
grade if the child qualifies as
a dependency exemption on the taxpayer's La. tax return unless the deduction for the
payment of tuition and fees for nonpublic elementary and secondary school tuition is taken
for the child. (R.S. 47:297(D))
(6)Tax credit for purchases of environmental equipment purchased between July 1, 1989, and
Dec. 31, 1991, designed to recover or recycle chlorofluorocarbons used as refrigerants in
commercial, home, and automobile air-conditioning systems, refrigeration units, and
industrial cooling applications. (R.S. 47:297(G))
(7)Tax credit for small-town health professionals such as a certified medical primary care
physician, a primary care physician assistant, a dentist, an optometrist, or a primary care
nurse practitioner. (R.S. 47:297(H))
(8)Tax credit for bone marrow donor expenses. (R.S. 47:297(I))
(9)Tax credit for educational expenses associated with attending college for a degree related to
law enforcement. (R.S. 47:297(J))
(10)Tax credit for each taxpayer who provides full-time employment to an individual who has
been convicted of a first time drug offense. (R.S. 47:297(K))
(11)Tax credit for purchases of bulletproof vests. (R.S. 47:297(L))
(12)Tax credit for long-term care insurance premiums. (R.S. 47:297(M))
(13)Tax credit for expenses incurred for travel or absence from work because of a living organ donation. (R.S. 47:297(N))
(14)Tax credit for employment of certain nonviolent offenders. (R.S. 47:297(O))
(15)Tax credit for the inclusion of accessible and barrier-free design elements in construction of
a new one- or two-family dwelling or the renovation of an existing dwelling. (R.S.
47:297(P))
(16)Tax credit for employment related expenses for maintaining household for certain disabled
dependents. (R.S. 47:297.2)
(17)Tax credit for the rehabilitation of an owner occupied residential or mixed-use property.
(R.S. 47:297.6)
(18)Tax credit for the Citizen's property insurance assessment. (R.S. 47:297.7)
(19)Tax credit for amounts paid by certain military servicemembers for obtaining La. hunting and
fishing licenses. (R.S. 47:297.9)
Proposed law shall be applicable to taxable periods beginning on and after Jan. 1, 2025.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 47:32(A), 32.1, 44.1(A), 287.732.2(B), 287.750(I), 293(9)(a)(iv) and (10), 294, 295,
300.1, 300.3(3), 4302(B), 6007(I), 6015(J), 6019(A)(1)(a)(i), 6020(H), 6022(D)(4)(intro. para.), and
6023(I) and R.S. 51:1787(L) and 2461; Adds R.S. 47:293(9)(a)(xxvi), 297.25, 300.6(B)(3),
300.7(C)(3), 3204(M), and 6022(M) and R.S. 51:2399.3(C); Repeals R.S. 47:32(B), 79,
293(9)(a)(ix) and (xvii), 293.2, 297, 297.2, 297.6, 297.7, 297.9, 297.20(A)(2), and 297.21(A)(2))