The Louisiana state sales tax will rise on Wednesday, the first day of 2025. Consumers will pay 10¢ on the dollar when making a purchase. The state sales tax will increases from 4.45% to 5%, the remainder depends on your local taxes. As Brooke Thorington with Louisiana Public radio reports, former LSU Economics Professor Jim Richardson says for most the difference is negligible. But he explains, “The lower income people, their income will be affected more than the higher income people. But that’s always the case, in terms of any type of tax you impose, especially sales tax.”
Under the governor’s plan, lawmakers increased the state sales tax because personal income and corporate taxes are going down, all in an effort to entice more businesses to Louisiana. Richardson says that won’t happen overnight. “You may get lucky in one year, but you’re talking about a five-ten year process.” And sales tax will also apply to streaming services, like Netflix, and digital books you might read on Kindle in 2025.
The temporary sales tax increase was just one of the stipulations of House Bill 10 that Louisiana legislators approved during a special session in November to overhaul the tax system. The 5% rate will continue through December 31, 2029. Then the rate will drop to 4.75%. Even before the changes, according to the Tax Foundation, Louisiana already had the highest combined state and average local sales tax in the country at 9.56%. For comparison, Arkansas ranked third highest at 9.45%.
Jan Moller, the executive director of the self-described non-partisan think tank Invest in Louisiana, concludes that Louisiana’s sales tax hike, “will ensure that low- and moderate-income families continue to pay a higher effective tax rate in Louisiana than those at the top.” According to the Institute on Taxation and Economic Policy (ITEP), Louisiana already had the 10th most regressive tax system in the country.
But Governor Jeff Landry stands behind those tax changes, saying at the bill signing ceremony back on December 4 at the state capitol, “I mean, Christmas is early for Louisiana.” Landry has described the tax reforms as historic, allowing citizens to keep more money in their pockets and would generate business investment in the state.
During Landry’s end of session address the governor concluded, “Today we have taken the first huge step. Today we have made generational change in this State. We now stand at the threshold of a new era for Louisiana, having just concluded a historic tax reform session.”
