Louisiana Basic Business Taxes
Corporations deriving income from state sources are taxed from 4 percent (1st $25,000) to 8 percent (more than $200,000) on net income, depending upon amount of income.
Corporation franchise tax:
The tax is $1.50 per $1,000 of value for the first $300,000 of capital employed in Louisiana, and $3.00 per $1,000 for higher amounts.
Sales and use taxes:
A 4 percent sales and use tax is levied on sale of tangible personal property at retail; the use, consumption, distribution, or storage of tangible personal property; leases and rentals; and sale of selected services in the state.
Land is assessed at 10 percent of fair market value. Business property is assessed at 15 percent of fair market value.
There is no state property tax. Property tax rates are set by parish and municipal governments and vary by parish.
Industrial ad valorem tax exemption program:
The program provides parish property tax exemptions for a five-year period and renewal for an additional five years for new or expanding manufacturers' capital expenditures (except land value). The exempt taxes comprise all millages, including school board millage.
Quality Jobs Program:
The Quality Jobs program provides a cash rebate as an incentive to encourage targeted businesses to locate in Louisiana, create quality jobs and promote economic development.
Must meet one of the following requirements:
• Fall under specified industries: bioscience, manufacturing, information technology, environmental technology, food technology, advanced materials or oil and gas field service;
• Have at least 50 percent of annual sales out-of-state
Enterprise Zone Program:
Jobs incentive program providing Louisiana income and franchise tax credits to a business increasing employment by 10 percent within the first 12 months or adding at least five new jobs in the first two years.
Industry Assistance Program:
Provides a tax exemption to operating Louisiana manufactures that can demonstrate that with the tax exemption, as well as its current and projected operating business plan, it will continue to maintain current employment levels and commit to significant investment, allowing the company to grow and prosper in Louisiana.
Industrial Tax Exemption Program:
Applies to new or existing Louisiana manufacturers for capital investments. Property tax (Ad Valorem) exemption for manufacturer's investment including all land improvements, buildings, machinery, equipment and any other property that is part of the manufacturing process and kept on site.
Inventory tax credits:
Manufacturers, distributors, and retailers are allowed a credit against the state corporate and personal income taxes and the corporation franchise tax for ad valorem taxes paid to political subdivisions on their inventory. The taxpayer is entitled to a refund for any allowable tax credit exceeding the aggregate state tax liability.
Renewable community designations:
Louisiana received three of the federal Renewal Community designations covering almost half of its parishes. Tax credits and exemptions available to companies creating jobs in these designated areas are numerous and include:
• 15 percent wage credits per worker
• $2,400 Work Opportunity credits
• Up to $5,000 for Welfare-to-Work credits
• $35,000 deductions for equipment purchases
• Commercial revitalization tax deductions
• Environmental cleanup cost reduction
• Zero percent capital gains rate
• 6 percent credit on investment for up to seven years
• 10-year low-income housing credit for owners of new or rehabilitated housing for low-income residents.
Special industrial districts:
Any parish in the state can create a special industrial area in any section not within the municipality. Industries in this area are free from taxation as long as they provide their own utilities, road maintenance, police, and other services.
Research and development tax credits:
The Research & Development Tax Credit Program was created to encourage businesses within the state to establish and continue efforts to conduct research and development activities within this state. Any taxpayer who claims for the taxable year a federal income tax credit under 26 U.S.C. § 41(a) for increasing research activities shall be allowed a tax credit to be applied against income and corporation franchise taxes due. Also, any person who receives a federal Small Business Innovation Research Grant as created by the Small Business Innovation Development Act of 1982 (P.L. 97-219), reauthorized by the Small Business Research and Development Enhancement Act (P.L. 102-564), and reauthorized again by the Small Business Reauthorization Act of 2000 (P.L. 106-554), shall be allowed a credit.
All credits awarded may be carried forward for no more than ten tax years from the date of the award, with a renewal after the first five years. The company does not have to amend past state returns to use the credit, unless it is desired to do so. If the taxpayer desires, they may elect to sell their unused tax credits to taxpayers with a Louisiana tax liability provided the seller is within one of the clusters as described in Louisiana Vision 2020, 2003 Update, submits a copy of the proposed sale or transfer detailing all of its terms, and copies of the taxpayer's last two LDOL Quarterly Report of Wages.
Technology commercialization tax credit:
Qualifying individuals or businesses that invest in the commercialization of Louisiana technology within Louisiana may earn, apply for, and be granted a refundable tax credit on any income or corporation franchise tax liability and earn a refundable tax credit based on new jobs created. Qualifying research centers that develop LA technology to be commercialized may earn, apply for, and be granted a refundable tax credit based on new jobs created. Such credits shall be earned and granted for a period of not less than five years.
Biomedical and university research and development parks:
Qualified medical and university concerns may be granted exemptions for state corporation income and franchise taxes. The total amount of state tax exemptions and rebates granted for any fiscal year shall not exceed 30 percent of the corporate income, franchise, and state sales/use taxes liability of the concern during the fiscal year preceding the fiscal year for which the exemptions are granted.
Qualified concerns may also be granted tax credits against state corporate income tax liabilities. Such credits, which may be carried forward up to five years, shall not exceed the cost of machinery and scientific equipment that is used on the premises of a medical or university research concern located in the park area.
Finally, qualified medical and university research concerns may be granted rebates from state and/or local sales/use taxes on machinery and equipment to be used by the applicant; on materials and building supplies to be used in the repair, reconstruction, modification, or construction of facilities; and on materials and supplies necessary for or used in the production of the applicant's product. Additionally, sales/use tax rebates may be granted on any other goods and services used or consumed by the applicant.
Entrepreneurs who commercialize research conducted at Louisiana universities receive a marketable 15 percent tax credit for their commercialization costs if they are $250,000 the first year and reach $2 million within four years.
Customized computer software development tax credit:
This program excludes state sales and use tax payments for custom software development. Local sales taxes are possible, depending on the election of each district to exempt this sales tax.
Biotechnology sales and use tax exclusion:
Biotechnology companies are excluded from paying state or local sales and use tax on capital expenditures and/or new research equipment if they meet two conditions:
• The company is identified by the NAICS code numbers 541710, 325412, 325414, 334516, or 339112
• The research is being conducted in the areas of medicine, health, biology, botany, biotechnology, agriculture, fisheries, forestry, pharmacy, veterinary sciences, or other life sciences.
Goods in transit:
Exemptions from ad valorem property taxes include imported goods that remain on the dock or common carrier, imports held in original containers, goods held in a storage facility for export, and goods in transit through the state destined for another state.
The Tax Equalization Program is an inducement to attract, retain, and encourage the expansion of, manufacturing establishments, headquarters, and warehousing and distribution establishments to Louisiana, which would not do so in Louisiana due to a higher tax burden. This program is designed to eliminate the tax differential through the equalization of the overall taxes between a Louisiana site and a competing site in another state. The sites under consideration must be valid and viable for the proposed operations. The competing site must offer comparative advantages equal to or greater than the comparative advantages offered at the Louisiana site. The governor must extend a written invitation to the company authorizing the company to submit an application for this program.
Film & Video Sales/Use Refund Program:
The program refunds three of the four cents of Louisiana state sales/use taxes paid out by motion picture production companies that film in the state and pay sales/use taxes on a minimum of $250,000 in purchases in the state. Before 2002, that figure was $1 million.
Film and video jobs tax credit:
This gives film producers with a $1 million Louisiana payroll a 20 percent tax credit. If payroll is $300,000, they get a 10 percent tax credit.
Film and video investment tax credit:
This allows Louisiana residents who invest $300,000 in a movie or television production a 10 percent tax credit on that investment. The credit is 15 percent of an investment over $1 million.
Restoration tax abatement:
Encourages through property owners in municipalities through local governments to expand, restore, improve and develop existing commercial structures and owner-occupied residences in Downtown Development Districts, Economic Development Districts or Historic Districts.
Corporate jobs tax credit program:
This program provides one-time income tax credits of $100 to $225 for each net new job created by a new business location or expansion. Manufacturers may not take this if they are granted the industrial ad valorem tax exemption or the enterprise zone incentive.
Louisiana State Contact:
Louisiana Economic Development
P.O. Box 94185
Baton Rouge, LA 70804-9185
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.