Louisiana Tax Guide: New Flat 3% Income Tax

Tax Overview

Louisiana underwent major tax reform effective 2025, replacing its progressive income tax system (with rates from 1.85% to 4.25%) with a flat 3% rate. This reform also eliminated the state's unusual deduction for federal income taxes paid and consolidated several credits and deductions. The result is a simpler, flatter system with one of the lower income tax rates among states that levy one.

Sales tax in Louisiana remains among the highest in the nation. The state rate was reduced to 4.45% as part of the reform package, but local parish and municipality taxes add substantially, pushing combined rates above 9.5% in many areas. Louisiana has historically had some of the highest combined sales tax rates in the country. Groceries are exempt from the state sales tax but may be subject to local taxes.

Property taxes in Louisiana are among the lowest in the nation, with an effective rate around 0.56%. The state offers a generous homestead exemption that shields the first $75,000 of a home's assessed value from parish taxes. Louisiana also provides a special assessment level freeze for seniors age 65 and older with income below certain thresholds.