Why It Matters
Louisiana’s overall tax structure competitiveness ranking is projected to improve from 40th in 2024 to 23rd in 2027 after changes pursued by Gov. Jeff Landry. The state’s income and corporate tax rankings improved, while its sales tax structure remained near the bottom nationally.
What Happened
Landry, who took office in 2024, pushed a tax law overhaul three years ago. Louisiana lowered personal and business income tax rates in 2024 and permanently eliminated its corporate franchise tax that year.
The changes moved Louisiana’s corporate tax ranking from 29th to tenth and its individual income tax ranking from 27th to ninth. Overall, the state improved 17 spots on the Tax Foundation’s state competitiveness index.
Louisiana also raised its state sales tax rate from 4.45% to 5%. Legislators rejected extending the sales tax to additional services, including lawn care and hair services, in 2024 and instead chose the higher rate.
Invest in Louisiana criticized the shift of the tax burden away from income and business taxes and toward sales taxes.
By the Numbers
2024 — year Landry took office and Louisiana enacted the tax changes
2027 — year Louisiana is ranked 23rd in overall tax structure competitiveness
17 spots — Louisiana’s improvement on the state competitiveness index
29th to tenth — change in Louisiana’s corporate tax ranking
27th to ninth — change in Louisiana’s individual income tax ranking
4.45% to 5% — change in Louisiana’s state sales tax rate
10.13% — Louisiana’s average combined state and local sales tax rate
49th — Louisiana’s sales tax structure ranking
Zoom Out
The Tax Foundation said Louisiana could more easily reduce its sales tax rate by applying the tax to a wider range of services. Louisiana ranked above Arkansas, which was 32nd, and Mississippi, which was 27th, but below Texas, which ranked fifth.
What’s Next
Louisiana’s projected 2027 ranking will reflect the tax changes already enacted, while the state’s sales tax structure remains ranked 49th. The 2024 decision not to extend the tax to additional services leaves that issue separate from the income and corporate tax changes.