Provides for the treatment of certain pass through entities under the inventory tax credit. (gov sig) (EG INCREASE SD RV See Note)
If enacted, SB65 will change how inventory tax credits are applied, especially for C and S corporations. It prohibits taxpayers taxed as C corporations from claiming the credit to offset corporation income tax liabilities for periods beginning on or after July 1, 2026. However, the bill allows excess credits to be carried forward for an additional five years, which eases potential financial impacts on businesses. Moreover, it redefines how the credits are claimed, shifting from state personal income tax claims to a new framework that includes state corporation income tax.
Senate Bill 65 (SB65) aims to modify the treatment of inventory tax credits for certain pass-through entities in Louisiana. The bill retains the existing provisions that allow a credit against Louisiana individual income tax for ad valorem taxes paid on inventory held by manufacturers, distributors, and retailers. Additionally, it clarifies the eligibility of S corporations to claim such credits, specifically under circumstances where shareholders elect to flow-through the credit. The legislation is designed to modernize and simplify the existing tax credit framework, particularly as it pertains to varying corporate structures.
The general sentiment among lawmakers regarding SB65 appears supportive of efforts to streamline tax processes for businesses, particularly as they relate to changing corporate designs. However, concerns may arise regarding the implications for certain taxpayers, especially those operating as C corporations who may not benefit post-2026. Proponents argue that overall, the changes could bolster economic activity by providing clearer guidelines for tax credit claims and encouraging business investment.
Notable contention around SB65 revolves around the limitations imposed on C corporations, which may create disparities in how different business structures access tax benefits. Critics may highlight the potential for complications arising from the bill’s requirements for electing flow-through credits, arguing that such criteria could disadvantage smaller businesses that do not operate under S corporation structures. Ultimately, the legislation may reflect broader tensions regarding how tax policies impact various business entities within the Louisiana economy.