--- name: la-income-tax description: Use this skill whenever asked about Louisiana individual income tax. Trigger on phrases like "Louisiana income tax", "LA income tax", "IT-540", "LDR", "R.S. 47:21", "Louisiana flat tax". Louisiana reformed to a flat 3% rate effective 2025 (Act 11 of 2024 3rd Extraordinary Session). ALWAYS load us-tax-workflow-base first. jurisdiction: US-LA domain: income_tax --- # la-income-tax ## Louisiana Individual Income Tax Skill — Self-Employed / Sole Proprietor > **Scope.** This skill covers Louisiana Form IT-540 (Resident Individual Income Tax Return) for sole proprietors and single-member LLCs. It addresses the flat 3% income tax rate (effective 2025), the significantly increased standard deduction, and Louisiana-specific modifications to federal AGI. It does NOT cover nonresident returns (Form IT-540B), corporate returns (CIFT-620), or partnership/S-corp pass-throughs. > **Quality tier.** Q3 — AI-drafted, not independently verified. All outputs must be reviewed by a qualified tax professional before filing. ## Section 1: Metadata **Metadata table** | Field | Value | | --- | --- | | Jurisdiction | Louisiana (US-LA) | | Tax authority | [Louisiana Department of Revenue (LDR)](https://revenue.louisiana.gov/) | | Filing portal | [Louisiana File Online](https://revenue.louisiana.gov/EServices) | | Legislation | La. R.S. 47:21 et seq.; Act 11 of the 2024 Third Extraordinary Session | | Primary form | Form IT-540 (Louisiana Resident Individual Income Tax Return) | | Filing deadline | May 15, 2027 (for tax year 2026) — Louisiana uses May 15, not April 15 | | Version | 0.1 | | Date | May 22, 2026 | | Validation status | AI-drafted — Q3 | ### Sources consulted 1. Louisiana Department of Revenue — Revenue Information Bulletin 25-012 (Income Tax Reform): 2. LDR — 2025 IT-540 Instructions: 3. EY Tax News — Louisiana flat income tax rate: 4. La. R.S. 47:32 — Tax rate 5. Act 11 (H.B. 10) of the 2024 Third Extraordinary Session ## Section 2: Quick reference — rates and thresholds ### State income tax rate **State income tax rate table** | Tax year | Rate | Source | | --- | --- | --- | | 2024 and prior | Graduated: 1.85% / 3.50% / 4.25% | La. R.S. 47:32 (prior law) | | 2025 and after | **Flat 3.00%** | Act 11 (H.B. 10, 2024 3rd Extraordinary Session) | - **Flat rate effective date** — Effective January 1, 2025, Louisiana replaced its three-bracket graduated system with a flat 3% rate on all taxable income, for all filing statuses. _(Act 11 (H.B. 10, 2024 3rd Extraordinary Session))_ ### Standard deduction (2025 tax year) **Standard deduction table** | Filing status | Amount | | --- | --- | | Single | $12,500 | | Married Filing Separately | $12,500 | | Married Filing Jointly | $25,000 | | Head of Household | $25,000 | | Qualifying Surviving Spouse | $25,000 | - **Standard deduction note** — These amounts were significantly increased by Act 11 (previously $4,500 / $9,000). Beginning January 1, 2026, the standard deduction is adjusted annually for CPI inflation. _(Act 11)_ ### Personal exemptions - **Personal exemptions repealed** — Act 11 repealed the prior personal exemptions ($1,000 for age 65+, blind, and dependents). These are no longer available for TY2025+. _(Act 11)_ ### Retirement income exemption - **Retirement income exemption** — $12,000 USD (annual retirement income exempt for taxpayers age 65+; adjusted annually for CPI beginning in 2026) ## Section 3: How this skill works with the federal return ### Starting point - **Starting point** — Louisiana starts from federal adjusted gross income (AGI) — Form 1040, Line 11. ### Additions to income **Additions to income table** | Item | Description | Source | | --- | --- | --- | | Out-of-state bond interest | Interest on bonds of other states must be added | La. R.S. 47:293(4) | | Federal income tax deducted | Louisiana historically allowed a deduction for federal taxes; under the reformed law, verify if this continues to apply | La. R.S. 47:293 | | IRC decoupling items | Any areas where Louisiana decouples from federal tax code changes | La. R.S. 47 | ### Subtractions from income **Subtractions from income table** | Item | Description | Source | | --- | --- | --- | | U.S. government interest | Interest on U.S. obligations | La. R.S. 47:293(6) | | Social Security benefits | Louisiana exempts Social Security | La. R.S. 47:44.2 | | Federal income taxes paid | Louisiana allows a deduction for federal income taxes paid (may be limited under new law — verify) | La. R.S. 47:293(3) | | Retirement income | Up to $12,000 for taxpayers age 65+ | La. R.S. 47:44.1 | | Military pay | Active-duty military compensation exclusion | La. R.S. 47:293 | ### Resulting computation - **Louisiana taxable income and tax formula** — Federal AGI + additions − subtractions − standard deduction = Louisiana taxable income → times 3% = Louisiana income tax. **Important:** Louisiana has historically allowed a deduction for federal income taxes paid, which is unusual among states. Under the 2025 reform, confirm the current treatment of this deduction. ## Section 4: Self-employed specific rules ### Estimated tax payments - **Estimated payment requirement** — Self-employed individuals must make quarterly estimated tax payments if they expect to owe $1,000 or more. **Estimated tax payment due dates** | Voucher | Due date | | --- | --- | | 1st quarter | April 15 | | 2nd quarter | June 15 | | 3rd quarter | September 15 | | 4th quarter | January 15 (following year) | - **Estimated payment form** — Use Form IT-540ES for estimated payments. ### Self-employment health insurance - **Self-employment health insurance treatment** — Louisiana follows federal treatment — the deduction reduces federal AGI and flows through. ### Retirement contributions (SEP, SIMPLE, Solo 401(k)) - **Retirement contributions treatment** — Louisiana follows federal treatment — these deductions reduce federal AGI and flow through. ### Home office deduction - **Home office deduction treatment** — Louisiana follows the federal home office deduction as part of Schedule C, included in federal AGI. ### QBI deduction (Section 199A) - **QBI deduction treatment** — Louisiana does not allow the federal QBI deduction because Louisiana starts from federal AGI (before the QBI deduction). The QBI deduction does not affect Louisiana taxable income. ### Filing deadline - **Filing deadline** — Louisiana's individual income tax return deadline is May 15 (not April 15). This is one month later than most states. ## Section 5: Tier 1 rules — deterministic **Tier 1 rules table** | Rule | Description | | --- | --- | | R-1 | Apply the flat 3% rate to Louisiana taxable income. No brackets for TY2025+. | | R-2 | Start from federal AGI and apply Louisiana modifications. | | R-3 | Subtract the standard deduction ($12,500 single/MFS; $25,000 MFJ/HoH/QSS for TY2025). | | R-4 | Social Security benefits are fully exempt. | | R-5 | U.S. government bond interest is exempt. | | R-6 | Retirement income exemption: up to $12,000 for age 65+. | | R-7 | The filing deadline is May 15, NOT April 15. | | R-8 | Prior personal exemptions ($1,000 for age 65+, blind, dependents) were repealed by Act 11 for TY2025+. | | R-9 | Standard deduction is adjusted annually for CPI beginning in TY2026. | ## Section 6: Tier 2 rules — requires judgment **Tier 2 rules table** | Rule | Description | | --- | --- | | J-1 | Determine the current-year treatment of the federal income tax deduction under the reformed law. | | J-2 | Evaluate whether itemized deductions exceed the increased standard deduction (less likely under the new $12,500/$25,000 amounts). | | J-3 | Assess IRC conformity for any areas where Louisiana decouples from recent federal changes. | | J-4 | Determine the CPI-adjusted standard deduction and retirement exemption amounts for TY2026+. | | J-5 | Evaluate credit for taxes paid to other states for multi-state taxpayers. | ## Section 7: Supplier pattern library **Supplier pattern library table** | Pattern | Louisiana treatment | | --- | --- | | Freelance income (Schedule C) | Flows through federal AGI → LA taxable income. Subject to flat 3% state tax. | | Rental income (Schedule E) | Flows through federal AGI → LA taxable income. Subject to flat 3%. | | Capital gains | Fully taxable at the flat 3% rate. | | Interest / dividends | Taxable except U.S. government obligations (exempt). | | Social Security | Fully exempt. | | Retirement distributions | Up to $12,000 exempt for age 65+; remainder taxable at 3%. | ## Section 8: Form mapping **Form mapping table** | Form IT-540 line | Description | Source | | --- | --- | --- | | Line 7 | Federal AGI (Form 1040, Line 11) | Federal return | | Line 8 | Louisiana standard deduction ($12,500 or $25,000) | La. R.S. 47:293; Act 11 | | Line 9 | Adjustments and modifications | La. R.S. 47:293 | | Line 10 | Louisiana taxable income | Computed | | Line 11 | Louisiana income tax (Line 10 × 3%) | La. R.S. 47:32 (as amended) | | Lines 12–19 | Credits (nonrefundable and refundable) | Various | | Lines 20–25 | Payments, withholding, estimated payments | Various | | Line 30 | Balance due or refund | Computed | ## Section 9: Refusal catalogue **Refusal catalogue table** | Code | Situation | Action | | --- | --- | --- | | REF-LA-01 | Taxpayer is a nonresident or part-year resident | Refuse; requires Form IT-540B. | | REF-LA-02 | Taxpayer has complex federal income tax deduction computations | Flag for reviewer — interaction between federal and state deductions requires specialist analysis. | | REF-LA-03 | Taxpayer has partnership or S-corp K-1 with Louisiana-specific adjustments | Flag for reviewer. | | REF-LA-04 | Taxpayer claims complex credits (e.g., LA Historic Rehabilitation, Motion Picture, Enterprise Zone) | Flag for reviewer — separate forms required. | | REF-LA-05 | Taxpayer needs CPI-adjusted amounts for TY2026+ | Flag for reviewer — confirm published inflation-adjusted figures. | ## Disclaimer This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. 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