Provides relative to the net operating loss deduction for corporate income tax (Item #5) (EN SEE FISC NOTE GF RV See Note)
Impact
The implications of HB20 are significant for state tax laws, particularly regarding how corporations can manage their income taxes following losses. By capping the NOL deduction at seventy-two percent, the bill seeks to provide clarity and consistency in tax calculations for businesses, potentially enhancing financial transparency. However, it also signifies a change in how losses can be accounted for at the state level, which could affect corporate financial strategies and tax liabilities moving forward.
Summary
House Bill 20 aims to amend the provisions surrounding the net operating loss (NOL) deduction for corporate income tax in Louisiana. The bill modifies R.S. 47:287.86(A) to allow corporations to deduct seventy-two percent of their net operating loss carryovers when calculating their Louisiana net income for taxable years. This deduction will be limited to not exceed seventy-two percent of the corporation’s net income. Importantly, the bill also repeals previous provisions that permitted an additional NOL deduction as outlined in Act No. 123 of the 2015 session.
Sentiment
The general sentiment around the bill appears to be supportive, particularly among legislators who view it as a necessary adjustment to the state's corporate tax structure. During discussions, there was a consensus that the bill would streamline the process for businesses and provide a more predictable taxation landscape. Few dissenting voices were noted, as the bill passed unanimously during voting, reflecting strong bipartisan support.
Contention
Despite the bill’s unanimous passage, there were points of contention regarding the implications of such changes. Opponents of previous iterations argued that restricting the NOL deduction could disproportionately impact smaller businesses that rely heavily on the ability to offset losses. However, such concerns seemed to gain less traction with the adjusted provisions of HB20, which focused on standardizing deductions within a clear framework. Nevertheless, the balance between ensuring fair tax law and providing tax relief remains a nuanced topic within legislative discussions.
Repeals three-year sunset of certain reductions to corporate income tax deductions, exemptions, and exclusions (Item #12) (RE1 SEE FISC NOTE GF RV See Note)