Use this skill with your AI agent
Paste this skill into your AI agent's context, or save the file to your project. Works with any AI agent that reads markdown.
la-income-tax.md215 lines9.8 KB
v1Louisiana
Not yet verified by an accountantContact accountant
| 1 | --- |
| 2 | name: la-income-tax |
| 3 | description: > |
| 4 | Use this skill whenever asked about Louisiana individual income tax. Trigger on phrases like |
| 5 | "Louisiana income tax", "LA income tax", "IT-540", "LDR", "R.S. 47:21", "Louisiana flat tax". |
| 6 | Louisiana reformed to a flat 3% rate effective 2025 (Act 11 of 2024 3rd Extraordinary Session). |
| 7 | ALWAYS load us-tax-workflow-base first. |
| 8 | jurisdiction: US-LA |
| 9 | version: "0.1" |
| 10 | validation_status: ai-drafted-q3 |
| 11 | --- |
| 12 | |
| 13 | # Louisiana Individual Income Tax Skill — Self-Employed / Sole Proprietor |
| 14 | |
| 15 | > **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. |
| 16 | |
| 17 | > **Quality tier.** Q3 — AI-drafted, not independently verified. All outputs must be reviewed by a qualified tax professional before filing. |
| 18 | |
| 19 | --- |
| 20 | |
| 21 | ## Section 1: Metadata |
| 22 | |
| 23 | | Field | Value | |
| 24 | |---|---| |
| 25 | | Jurisdiction | Louisiana (US-LA) | |
| 26 | | Tax authority | [Louisiana Department of Revenue (LDR)](https://revenue.louisiana.gov/) | |
| 27 | | Filing portal | [Louisiana File Online](https://revenue.louisiana.gov/EServices) | |
| 28 | | Legislation | La. R.S. 47:21 et seq.; Act 11 of the 2024 Third Extraordinary Session | |
| 29 | | Primary form | Form IT-540 (Louisiana Resident Individual Income Tax Return) | |
| 30 | | Filing deadline | May 15, 2027 (for tax year 2026) — Louisiana uses May 15, not April 15 | |
| 31 | | Version | 0.1 | |
| 32 | | Date | May 22, 2026 | |
| 33 | | Validation status | AI-drafted — Q3 | |
| 34 | |
| 35 | ### Sources consulted |
| 36 | |
| 37 | 1. Louisiana Department of Revenue — Revenue Information Bulletin 25-012 (Income Tax Reform): <https://dam.ldr.la.gov/lawspolicies/RIB-25-012-Louisiana-Individual-Income-Tax-Reform-1.pdf> |
| 38 | 2. LDR — 2025 IT-540 Instructions: <https://revenue.louisiana.gov/tax-forms/individuals/> |
| 39 | 3. EY Tax News — Louisiana flat income tax rate: <https://taxnews.ey.com/news/2024-2322-louisiana-law-implements-a-flat-personal-income-tax-rate-starting-in-2025> |
| 40 | 4. La. R.S. 47:32 — Tax rate |
| 41 | 5. Act 11 (H.B. 10) of the 2024 Third Extraordinary Session |
| 42 | |
| 43 | --- |
| 44 | |
| 45 | ## Section 2: Quick reference — rates and thresholds |
| 46 | |
| 47 | ### State income tax rate |
| 48 | |
| 49 | | Tax year | Rate | Source | |
| 50 | |---|---|---| |
| 51 | | 2024 and prior | Graduated: 1.85% / 3.50% / 4.25% | La. R.S. 47:32 (prior law) | |
| 52 | | 2025 and after | **Flat 3.00%** | Act 11 (H.B. 10, 2024 3rd Extraordinary Session) | |
| 53 | |
| 54 | Effective January 1, 2025, Louisiana replaced its three-bracket graduated system with a **flat 3% rate** on all taxable income, for all filing statuses. |
| 55 | |
| 56 | ### Standard deduction (2025 tax year) |
| 57 | |
| 58 | | Filing status | Amount | |
| 59 | |---|---| |
| 60 | | Single | $12,500 | |
| 61 | | Married Filing Separately | $12,500 | |
| 62 | | Married Filing Jointly | $25,000 | |
| 63 | | Head of Household | $25,000 | |
| 64 | | Qualifying Surviving Spouse | $25,000 | |
| 65 | |
| 66 | **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. |
| 67 | |
| 68 | ### Personal exemptions |
| 69 | |
| 70 | Act 11 **repealed** the prior personal exemptions ($1,000 for age 65+, blind, and dependents). These are no longer available for TY2025+. |
| 71 | |
| 72 | ### Retirement income exemption |
| 73 | |
| 74 | Up to $12,000 of annual retirement income is exempt for taxpayers age 65+. This amount is adjusted annually for CPI beginning in 2026. |
| 75 | |
| 76 | --- |
| 77 | |
| 78 | ## Section 3: How this skill works with the federal return |
| 79 | |
| 80 | ### Starting point |
| 81 | |
| 82 | Louisiana starts from **federal adjusted gross income (AGI)** — Form 1040, Line 11. |
| 83 | |
| 84 | ### Additions to income |
| 85 | |
| 86 | | Item | Description | Source | |
| 87 | |---|---|---| |
| 88 | | Out-of-state bond interest | Interest on bonds of other states must be added | La. R.S. 47:293(4) | |
| 89 | | 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 | |
| 90 | | IRC decoupling items | Any areas where Louisiana decouples from federal tax code changes | La. R.S. 47 | |
| 91 | |
| 92 | ### Subtractions from income |
| 93 | |
| 94 | | Item | Description | Source | |
| 95 | |---|---|---| |
| 96 | | U.S. government interest | Interest on U.S. obligations | La. R.S. 47:293(6) | |
| 97 | | Social Security benefits | Louisiana exempts Social Security | La. R.S. 47:44.2 | |
| 98 | | 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) | |
| 99 | | Retirement income | Up to $12,000 for taxpayers age 65+ | La. R.S. 47:44.1 | |
| 100 | | Military pay | Active-duty military compensation exclusion | La. R.S. 47:293 | |
| 101 | |
| 102 | ### Resulting computation |
| 103 | |
| 104 | Federal AGI + additions − subtractions − standard deduction = Louisiana taxable income → times 3% = Louisiana income tax. |
| 105 | |
| 106 | **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. |
| 107 | |
| 108 | --- |
| 109 | |
| 110 | ## Section 4: Self-employed specific rules |
| 111 | |
| 112 | ### Estimated tax payments |
| 113 | |
| 114 | Self-employed individuals must make quarterly estimated tax payments if they expect to owe $1,000 or more. |
| 115 | |
| 116 | | Voucher | Due date | |
| 117 | |---|---| |
| 118 | | 1st quarter | April 15 | |
| 119 | | 2nd quarter | June 15 | |
| 120 | | 3rd quarter | September 15 | |
| 121 | | 4th quarter | January 15 (following year) | |
| 122 | |
| 123 | Use Form IT-540ES for estimated payments. |
| 124 | |
| 125 | ### Self-employment health insurance |
| 126 | Louisiana follows federal treatment — the deduction reduces federal AGI and flows through. |
| 127 | |
| 128 | ### Retirement contributions (SEP, SIMPLE, Solo 401(k)) |
| 129 | Louisiana follows federal treatment — these deductions reduce federal AGI and flow through. |
| 130 | |
| 131 | ### Home office deduction |
| 132 | Louisiana follows the federal home office deduction as part of Schedule C, included in federal AGI. |
| 133 | |
| 134 | ### QBI deduction (Section 199A) |
| 135 | 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. |
| 136 | |
| 137 | ### Filing deadline |
| 138 | Louisiana's individual income tax return deadline is **May 15** (not April 15). This is one month later than most states. |
| 139 | |
| 140 | --- |
| 141 | |
| 142 | ## Section 5: Tier 1 rules — deterministic |
| 143 | |
| 144 | | Rule | Description | |
| 145 | |---|---| |
| 146 | | R-1 | Apply the flat 3% rate to Louisiana taxable income. No brackets for TY2025+. | |
| 147 | | R-2 | Start from federal AGI and apply Louisiana modifications. | |
| 148 | | R-3 | Subtract the standard deduction ($12,500 single/MFS; $25,000 MFJ/HoH/QSS for TY2025). | |
| 149 | | R-4 | Social Security benefits are fully exempt. | |
| 150 | | R-5 | U.S. government bond interest is exempt. | |
| 151 | | R-6 | Retirement income exemption: up to $12,000 for age 65+. | |
| 152 | | R-7 | The filing deadline is May 15, NOT April 15. | |
| 153 | | R-8 | Prior personal exemptions ($1,000 for age 65+, blind, dependents) were repealed by Act 11 for TY2025+. | |
| 154 | | R-9 | Standard deduction is adjusted annually for CPI beginning in TY2026. | |
| 155 | |
| 156 | --- |
| 157 | |
| 158 | ## Section 6: Tier 2 rules — requires judgment |
| 159 | |
| 160 | | Rule | Description | |
| 161 | |---|---| |
| 162 | | J-1 | Determine the current-year treatment of the federal income tax deduction under the reformed law. | |
| 163 | | J-2 | Evaluate whether itemized deductions exceed the increased standard deduction (less likely under the new $12,500/$25,000 amounts). | |
| 164 | | J-3 | Assess IRC conformity for any areas where Louisiana decouples from recent federal changes. | |
| 165 | | J-4 | Determine the CPI-adjusted standard deduction and retirement exemption amounts for TY2026+. | |
| 166 | | J-5 | Evaluate credit for taxes paid to other states for multi-state taxpayers. | |
| 167 | |
| 168 | --- |
| 169 | |
| 170 | ## Section 7: Supplier pattern library |
| 171 | |
| 172 | | Pattern | Louisiana treatment | |
| 173 | |---|---| |
| 174 | | Freelance income (Schedule C) | Flows through federal AGI → LA taxable income. Subject to flat 3% state tax. | |
| 175 | | Rental income (Schedule E) | Flows through federal AGI → LA taxable income. Subject to flat 3%. | |
| 176 | | Capital gains | Fully taxable at the flat 3% rate. | |
| 177 | | Interest / dividends | Taxable except U.S. government obligations (exempt). | |
| 178 | | Social Security | Fully exempt. | |
| 179 | | Retirement distributions | Up to $12,000 exempt for age 65+; remainder taxable at 3%. | |
| 180 | |
| 181 | --- |
| 182 | |
| 183 | ## Section 8: Form mapping |
| 184 | |
| 185 | | Form IT-540 line | Description | Source | |
| 186 | |---|---|---| |
| 187 | | Line 7 | Federal AGI (Form 1040, Line 11) | Federal return | |
| 188 | | Line 8 | Louisiana standard deduction ($12,500 or $25,000) | La. R.S. 47:293; Act 11 | |
| 189 | | Line 9 | Adjustments and modifications | La. R.S. 47:293 | |
| 190 | | Line 10 | Louisiana taxable income | Computed | |
| 191 | | Line 11 | Louisiana income tax (Line 10 × 3%) | La. R.S. 47:32 (as amended) | |
| 192 | | Lines 12–19 | Credits (nonrefundable and refundable) | Various | |
| 193 | | Lines 20–25 | Payments, withholding, estimated payments | Various | |
| 194 | | Line 30 | Balance due or refund | Computed | |
| 195 | |
| 196 | --- |
| 197 | |
| 198 | ## Section 9: Refusal catalogue |
| 199 | |
| 200 | | Code | Situation | Action | |
| 201 | |---|---|---| |
| 202 | | REF-LA-01 | Taxpayer is a nonresident or part-year resident | Refuse; requires Form IT-540B. | |
| 203 | | REF-LA-02 | Taxpayer has complex federal income tax deduction computations | Flag for reviewer — interaction between federal and state deductions requires specialist analysis. | |
| 204 | | REF-LA-03 | Taxpayer has partnership or S-corp K-1 with Louisiana-specific adjustments | Flag for reviewer. | |
| 205 | | REF-LA-04 | Taxpayer claims complex credits (e.g., LA Historic Rehabilitation, Motion Picture, Enterprise Zone) | Flag for reviewer — separate forms required. | |
| 206 | | REF-LA-05 | Taxpayer needs CPI-adjusted amounts for TY2026+ | Flag for reviewer — confirm published inflation-adjusted figures. | |
| 207 | |
| 208 | --- |
| 209 | |
| 210 | ## Disclaimer |
| 211 | |
| 212 | This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional before filing or acting upon. |
| 213 | |
| 214 | The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com). |
| 215 |
Run this skill, then get an accountant to check it
After running the full skill pack in your AI agent, sign up and upload your worksheet. We'll connect you with a trusted accountant in our network who can review your numbers before you file.
Quality
Q3: AI-drafted
AI-generated with structure and citations. Not independently verified.
Needs deep research against tax authority websites to reach Q2.
Accountant Review
Not yet reviewed
About
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.
US-LAty-2025
Use this skill
This skill is open source and free to use in any AI agent. Copy it, download it, or clone the repo. If you find an error, flag it — a licensed accountant will review.