By Quinn Marceaux
LSU Manship School News Service
The House of Representatives voted 86-13 Wednesday to approve a
bill that might further cut the state’s new flat individual income tax rate and create a tax break for
seniors starting in 2027.
But the changes could occur only if voters were to pass a constitutional amendment
allowing the state to shift hundreds of millions of dollars from reserve funds into the state
general fund.
Wednesday’s vote was just the first step in a lengthy process.
Under the bill that the House passed, Louisiana’s personal income tax rate would
decrease to 2.75% from 3% beginning Jan. 1, 2027, if voters approved the constitutional
amendment.
In addition, the bill, House Bill 667, calls for residents 65 and older would be eligible for
an extra income tax deduction equal to the standard deduction for single filers, currently
$12,500, effectively doubling their deduction under existing law.
But the Louisiana Senate still needs to consider the bill, and both chambers would need to
pass a separate bill creating the constitutional amendment. Voters rejected a much more
complicated amendment in March, and they would need to approve a stripped-down version by
sometime next year for the changes to happen by 2027.
Late last year, Gov. Jeff Landry signed a bill changing the state’s personal income tax to
a flat 3% rate from a tiered system with the highest rate of 4.25%.
According to the Legislative Fiscal Office, the bill would substantially impact
Louisiana’s budget.
The income tax rate reduction alone is projected to reduce state general fund revenue by
$54.5 million in 2027, followed by $310.3 million in 2028 and $250.8 million annually in
subsequent years.
The new deduction for residents aged 65 and older would further reduce revenue by
$67.6 million in 2028, $68.6 million in 2029 and $69.7 million in 2030, assuming seniors have
enough income to fully claim the benefit.
Bill author Rep. Julie Emerson, R-Carencro, said the proposal signals to voters that
lawmakers intend to use newly available general fund dollars to offer tax relief, especially for
seniors.
“We know that our citizens want to see some relief,” Emerson said. “This shows them
upfront that’s what we want to do.”
She also argued that Louisiana must keep pace with regional neighbors who are
aggressively reducing or eliminating their income taxes.
“We want to continue to lower those rates like the states around us have,” Emerson said.
“Texas being at zero and Florida being at zero and our neighbors in Mississippi are getting on a
pathway to zero income tax, I want Louisiana to keep up in order for our economy to continue to
grow so we won’t be having these conversations about fiscal stability because our economy will
continue to grow.”
Supporters believe lowering income taxes will make Louisiana more attractive for
businesses, retirees and workers, helping to expand the economy.
Rep. Matthew Willard, D-New Orleans, who opposed the bill, raised concerns about the
timing and long-term fiscal impact.
“The current tax rates haven’t even been in effect for half a year,” Willard said. “Don’t
you think it would be more prudent to have more data for possibly a year or two?”
Willard also questioned whether Louisiana could afford both the tax cuts and maintain
commitments like teacher stipends. Emerson responded that the state’s Revenue Stabilization
Fund, which received over $1 billion last year, would help cover the reductions.
“We feel comfortable with the numbers as they are,” Emerson said.
Another layer of uncertainty involves potential budget cuts in Washington. Willard noted
that federal policy changes could affect Louisiana’s revenue streams from certain federal
agencies.
“Is this a good time to make these decisions with so much uncertainty happening at the
federal level right now?” Willard asked.
Emerson acknowledged the unpredictability but argued the state should not delay.
“Every year we debate these things, and there are always changes at the federal level,”
Emerson said.