As the calendar turns to autumn, we dedicate this month to Louisiana, the Pelican State. This state is a place for all ages. Louisiana is known for its soulful music, amazing food and rich heritage. The state’s multicultural background comes together in the form of festivities and lively interactions with the locals. Its annual Mardi Gras festivities and extravagant floats bring visitors from all over the world. After suffering a tragic loss in the form of Hurricane Katrina ten years ago, the state has been putting emphasis on its efforts to restore business and livelihood. Louisiana’s economic rise has been as hot as its climate.

Business Climate

For years, Louisiana has suffered a reputation as a challenging state in which to do business. However, Louisiana has been making significant changes. Since Gov. Jindal’s election to office in 2008, he has initiated state governmental ethic reforms and business tax cuts. Among the tax cuts is the removal of sales taxes on manufacturing machinery and equipment, natural gas and business utilities. The state also eliminated franchise tax on corporate debt and taxes on the sale of privately held business in order to persuade successful entrepreneurs to stay in the state. These changes have proved to be significant as the perception of the state is changing favorably.

A fascinating program Louisiana has is its LED Faststart program. The state partners with eligible companies to help develop their business, which in turn goes back to the community in the form of jobs and benefits to employees. With the program, each aspect of a business is analyzed, in order for the state to assist companies in recruiting and training of highly qualified talents. Each approach is tailored to the needs of the respective company. Click here to view the eligibility requirements for the LED Faststart program.

Louisiana’s efforts to boost its economic development have allowed it to stay competitive and keep its populace instead of having them seek jobs out of the state.

Taxes

According to the Tax Foundation’s 2015 State Business Tax Climate Index, Louisiana sits in the bottom half, ranking 35th out of 50.  Louisiana’s corporate income tax system consists of five brackets with rates ranging from 4% to 8%. That rate ranks 13th highest among states levying a corporate income tax. Louisiana’s state and local corporate income tax collections per person were $63 in 2012 which ranked 12th lowest nationally.

Louisiana’s personal income tax is also uses a bracket system but with three tiers with the rates of 2%, 4%, and 6%. Its top rate of 6% is the 19th highest among states levying an individual income tax. Louisiana’s state and local income tax collections per person were $539 in 2012 which ranked 12th lowest nationally. The state levies a 4% general sales or use tax on consumers, which is below the national median of 5.95%.

An interesting fact about Louisiana is that instead of having a county system, they use the term “parish.” In Louisiana, parishes, municipalities, school boards, and other governing authorities are authorized to impose sales and use taxes. These sales and use taxes are in addition to those imposed by the state, and are administered and collected at the local level separately from the taxes collected by the Louisiana Department of Revenue. Most parishes have an alternate website in which taxpayers can file and pay their taxes online. Having to file and remit to multiple governing entities is what makes Louisiana a complicated state in which to file taxes. For a list of parishes and their respective local tax rates click here.

Tax Credits & Incentives

Angel Investor Tax Credit (AITC): This program encourages accredited investors to invest in early stage, small wealth-creating Louisiana businesses that seek startup and expansion capital. With an annual program cap of $3.6 million, it provides a 25.2% tax credit on investments by accredited investors who invest in businesses certified by Louisiana Economic Development as Louisiana Entrepreneurial Businesses (LEB).

  1. Investors can invest $720,000 per business per year and $1.44 million per business over the life of the program.
  2. Qualifying investments include: capital improvements, plant equipment, research & development, and working capital.
  3. Unfortunately, the AITC program sunsets on July 1, 2017.

Research and Development Tax Credit (R&D): The program encourages existing businesses with operations in Louisiana to establish or continue research and development activities within the state. The program offers a 40% tax credit on research and development expenditures incurred in Louisiana. There is no cap and no minimum requirement.

  1. In order for credits to be awarded, a taxpayer must claim the expenditures within one year after December 31 of the year in which the expenditure was incurred.
  2. The following businesses will be ineligible to participate in the R&D tax credit program, unless specifically invited by the Secretary of LED to:
  3. Professional services firms that do not have a pending or issued United States patent related to the qualified research expenditures claimed; and
  4. Businesses primarily engaged in custom manufacturing and custom fabricating that do not have a pending or issued United States patent related to the qualified research expenditures claimed

Enterprise Zone (EZ): This program provides Louisiana income and franchise tax credits to a new or existing business located in the state creating permanent net new full-time jobs, and hiring at least 50% of those from one of four targeted groups. The program gives a one-time $2,500 job tax credit for each net new job created. It also allows for 4% rebate of sales and use taxes paid on qualifying materials, machinery, furniture, and/or equipment purchased or a 1.5% refundable investment tax credit on the total capital investment, excluding tax exempted items.

Target groups:

  1. Residents: someone living in Enterprise Zone within the state.
    1. Enterprise Zone listing by Parish – 2000
    2. Enterprise Zone listing by Parish – 2010(The 2010 listing should be used for Advance Notifications received on or after July 1, 2013)
  2. People receiving an approved form of public assistance.
  3. People lacking basic skills. A person performing below a ninth grade proficiency in reading, writing or mathematics.
  4. People unemployable by traditional standards.

Random Facts

  • The world famous “Mardi Gras” is celebrated in New Orleans. Mardi Gras is an ancient custom that originated in southern Europe. It celebrates food and fun just before the 40 days of Lent: a Catholic time of prayer and sacrifice.
  • Louisiana was named in honor of King Louis XIV.
  • Louisiana is the only state in the union that does not have counties. Its political subdivisions are called parishes.
  • Breaux Bridge is known as the “Crawfish Capital of the World”.
  • In Louisiana, biting someone with your natural teeth is considered a simple assault, but biting someone with your false teeth is considered an aggravated assault.
  • Louisiana is the only state with a large population of Cajuns, descendants of the Acadians who were driven out of Canada in the 1700s because they wouldn’t pledge allegiance to the King of England
Louisiana Multistate State Taxes Tax Credits