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)
Filing portal	Louisiana File Online
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): https://dam.ldr.la.gov/lawspolicies/RIB-25-012-Louisiana-Individual-Income-Tax-Reform-1.pdf
2. LDR — 2025 IT-540 Instructions: https://revenue.louisiana.gov/tax-forms/individuals/
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
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. 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.

The most up-to-date, verified version of this skill is maintained at openaccountants.com.