What Percentage of Taxes Are Taken Out in Louisiana?

Louisiana’s tax structure involves various percentages and rates that vary by tax type, location, and individual circumstances. Taxes are collected at both state and local levels, creating a system where the total percentage paid can differ. Understanding these components provides insight into the tax burden residents and visitors experience.

Louisiana Individual Income Tax

Louisiana employs a progressive individual income tax system, which transitions to a flat rate in the upcoming tax year. For the 2024 tax year (filed in 2025), the state’s graduated income tax rates are 1.85%, 3.5%, and 4.25%, based on income level and filing status. Beginning with the 2025 tax year (filed in 2026), Louisiana will implement a flat 3% rate for all taxable income. This change simplifies tax calculation, applying a single percentage to taxable income.

Taxable income largely aligns with federal definitions, starting with federal adjusted gross income. Deductions and exemptions can reduce this amount, impacting the effective percentage of income subject to state tax. For the 2024 tax year, a combined personal exemption and standard deduction is available: $4,500 for single filers and $9,000 for married filing jointly or head of household. These amounts are integrated into the state’s tax tables.

Deductions change for the 2025 tax year. The standard deduction will increase to $12,500 for single filers and $25,000 for married filing jointly or head of household filers. Beyond the standard deduction, taxpayers may claim a $1,000 exemption for each dependent. Certain income types are also exempt or eligible for subtractions, which can further lower taxable income.

Louisiana does not tax Social Security income. Individuals aged 65 or older can exclude up to $6,000 of retirement income annually, increasing to $12,000 for the 2025 tax year. Federal and specific state retirement benefits are also exempt. Military personnel not domiciled in Louisiana are exempt from state taxes on their military wages. Resident military personnel stationed outside the state for at least 120 consecutive days may deduct up to $30,000 of their military pay.

Louisiana Sales Tax

Louisiana’s sales tax structure includes a statewide rate and local sales tax rates, which collectively determine the total percentage applied to purchases. Effective January 1, 2025, the state sales and use tax rate will increase from 4.45% to 5%. This change impacts all transactions subject to state sales tax.

Local sales tax rates are imposed by parishes, municipalities, and other special districts. These local rates vary from 0% to 8.5%. The combined state and local sales tax rate can fluctuate significantly by location, potentially reaching as high as 11.45%. Businesses are responsible for collecting the correct combined rate based on the destination of the sale, meaning the ship-to address for taxable transactions.

Most tangible personal property and some services are subject to sales tax, but Louisiana provides specific exemptions. Unprepared groceries are exempt from the state sales tax. Similarly, prescription drugs and residential utilities are also generally exempt from the state portion of the sales tax. Certain medical devices and purchases made under Medicare or Medicaid programs may also qualify for sales tax exemptions.

Louisiana Property Tax

Property taxes in Louisiana are primarily local, resulting in significant variations across parishes and municipalities. The amount of property tax owed is determined by multiplying the property’s assessed value by the local millage rates. These millage rates are set by local ordinances, and any rates exceeding a base amount typically require approval by the local electorate.

Property is assessed at a percentage of its fair market value. For residential properties, the assessed value is set at 10% of the fair market value. For example, a home with a fair market value of $200,000 would have an assessed value of $20,000. Commercial properties are assessed at a higher rate of 15% of their fair market value.

Millage rates are expressed in mills, where one mill equals $1 of tax for every $1,000 of assessed value. Therefore, a 20-mill tax would result in a $20 tax for every $1,000 of assessed value. The total millage rate applied to a property combines rates from various taxing authorities, such as the parish, school board, and city, which contribute to the overall property tax percentage.

The Louisiana Homestead Exemption reduces the taxable value of primary residences for many homeowners. This exemption allows for the first $7,500 of a homestead’s assessed value to be exempt from state, parish, and special ad valorem taxes. For a residential property assessed at 10% of fair market value, this $7,500 assessed value exemption translates to $75,000 of fair market value. This exemption typically does not apply to municipal property taxes, except in Orleans Parish.