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Legislators

Louisiana Tax Policy Changes to Reduce Burden on Most Households

Strategic Insights

— 2 min read

The changes made to Louisiana's tax policy last fall will result in a double-digit reduction in the overall burden on most households compared to prior sales and income tax rates, according to a nonpartisan fiscal impact study. TheReset Louisiana collaboration found that while the new tax system is "slightly less progressive" than the previous one, it remains "modestly progressive overall." The tax changes include a flat 3.5% income tax on all households, regardless of income, which replaced a tiered tax bracket structure.

Key Takeaways:

  • The new tax policy will reduce the overall burden on most households by double-digits compared to prior sales and income tax rates.
  • The combined impact of the tax changes is considered "slightly less progressive" than the previous system but still "modestly progressive overall."
  • The income tax changes will result in a lower marginal tax rate for middle- and upper-income households, while income taxes have effectively been eliminated for lower-income households.
  • The new tax system will provide at least a 20% tax liability reduction to 721,000 Louisiana households, or 42% of total state taxpayers.
  • Households with income between $50,000 and $200,000 will see their sales and income taxes decrease from 13% to 19%.
  • Those making more than $200,000 will expect a 20% reduction in sales and income taxes.
  • Approximately 52% of the total income tax reduction will go to filers with income in the top 10 percentile, while about 48% will go to the remaining 90% of households.

Statistics:

  • 721,000 Louisiana households, or 42% of total state taxpayers, will see at least a 20% tax liability reduction.
  • 52% of the total income tax reduction will go to filers with income above $150,000, while about 48% will go to filers with income below $150,000.
  • Households with income between $50,000 and $200,000 will see a reduction in sales and income taxes from 13% to 19%.
  • Those making more than $200,000 will expect a 20% reduction in sales and income taxes.
  • A slight increase in taxes, less than $50 a year, is anticipated for those making less than $10,000, mainly because they don't make enough money to see a benefit from the income tax changes.

Sources:

  • [Albrecht Tax Study #2.pdf by Greg Albrecht](https://static1.squarespace.com/static/5c7ffa7b90f9042269f76e06/t/689f6cbfb8e25d3d2bd4d1af/1755278527039/Albrecht+Tax+Study+%232.pdf)
  • [Reset Louisiana Report](https://lailluminator.com/donate/?oa_referrer=midstorybox)
  • [Leaders for a Better Louisiana](https://www.leadersforbetterla.org/)

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