How Much Is Louisiana State Income Tax?

Louisiana’s individual income tax system is a state-level assessment, distinct from the federal income tax. This tax applies to income earned by residents and, in some cases, non-residents with income sourced within Louisiana. Understanding this system helps individuals determine their financial obligations to the state. The amount of state income tax an individual owes depends on their total income, filing status, and any applicable deductions or credits.

Louisiana Income Tax Rates

Louisiana utilizes a progressive income tax rate structure for the 2024 tax year. For single filers or those married filing separately, the first $12,500 of taxable income is taxed at 1.85 percent. Income between $12,501 and $50,000 is subject to a 3.50 percent tax rate. Any taxable income exceeding $50,000 is taxed at 4.25 percent.

For taxpayers filing as married jointly or head of household, the initial $25,000 of taxable income is taxed at 1.85 percent. Amounts between $25,001 and $100,000 are taxed at 3.50 percent, and any taxable income above $100,000 faces the 4.25 percent rate. Louisiana is transitioning to a flat income tax rate of 3 percent starting for the 2025 tax year. This change will apply to income earned in 2025 and will be reflected during the 2026 filing season.

Understanding Your Taxable Income

Determining Louisiana taxable income involves starting with an individual’s gross income and then making adjustments through deductions and exemptions. Gross income includes all income from various sources, such as wages, salaries, interest, and dividends, similar to how it is defined for federal tax purposes. Resident taxpayers must report all income, regardless of its source, on their Louisiana income tax return, Form IT-540.

To reduce gross income to Louisiana taxable income, taxpayers can claim either a standard deduction or itemize their deductions. For the 2024 tax year, Louisiana combines the personal exemption and standard deduction into a single amount. Single filers with up to two exemptions can claim a standard deduction of $4,500, with an additional $1,000 for each exemption beyond two. Married couples filing jointly with up to two exemptions are eligible for a $9,000 standard deduction, plus $1,000 for each additional exemption.

Taxpayers can itemize deductions if their eligible expenses exceed the standard deduction amount. Itemized deductions can include mortgage interest, certain state taxes, medical costs, and charitable donations.

Certain types of income may also be excluded from Louisiana taxable income. For instance, individuals aged 65 and older can exclude up to $6,000 of retirement income for the 2024 tax year. Federal retirement benefits and specific state retirement benefits are also exempt. Social Security income is not subject to state taxation in Louisiana.

Available Tax Credits

Tax credits directly reduce an individual’s tax liability, unlike deductions which only reduce taxable income. After calculating the tax based on taxable income and rates, applicable credits are subtracted from the tax owed. Louisiana offers various tax credits that can lower a taxpayer’s final bill.

One common credit is the Earned Income Tax Credit (EITC), which provides financial relief to low- and moderate-income working individuals and families. Louisiana’s EITC is 5% of the federal credit amount. Another credit is the Child and Dependent Care Tax Credit, which helps offset child care expenses for working parents. For those with a federal adjusted income of $25,000 or less, this credit can be refundable for up to 50% of the federal credit. For incomes over $25,000, a non-refundable credit of up to 30% of the federal credit may be claimed.

Other credits include the Stillborn Child Credit, offering $2,000, and the Adoption of Unrelated Infant Credit, which provides $5,000 for qualifying adoptions.

Steps to Calculate Your Louisiana State Income Tax

Calculating your Louisiana state income tax involves a methodical process. The first step is to determine your total gross income for the tax year. This includes all wages, salaries, tips, interest, and dividends. Individuals typically use information from their W-2 and 1099 forms, along with their federal tax return, to gather this data.

The next step involves reducing your gross income by applying available deductions to arrive at your Louisiana taxable income. You will choose between taking the standard deduction or itemizing your deductions, selecting the option that yields the lower taxable income. For the 2024 tax year, standard deduction amounts are $4,500 for single filers and $9,000 for married couples filing jointly, with additional amounts for more exemptions. This figure, often referred to as “tax table income” on Form IT-540, is the amount on which your tax liability will be calculated.

Once your Louisiana taxable income is determined, apply the state’s progressive tax rates for the 2024 tax year. This involves taxing portions of your income at 1.85%, 3.50%, and 4.25% according to the specific income brackets for your filing status. For example, a single filer’s first $12,500 of taxable income is taxed at 1.85%, and the next portion up to $50,000 is taxed at 3.50%, with any remaining income above $50,000 taxed at 4.25%. This calculation results in your initial tax liability before credits.

The final step is to subtract any applicable tax credits from your calculated tax liability. Credits, such as the Earned Income Tax Credit or the Child and Dependent Care Tax Credit, directly reduce the tax you owe. After subtracting all eligible credits, the resulting amount is your net Louisiana state income tax liability or the refund you are owed. This systematic approach ensures that all income, deductions, and credits are properly accounted for in determining the final tax amount.