By Meghan Friedmann
The Times-Picayune | The New Orleans Advocate
(TNS)
For the third year in a row, Louisiana has the highest average combined state and local sales tax rate in the country at 10.11%, according to a new report from the Tax Foundation.
The rate went up 0.55% last year after lawmakers overhauled the state tax system, also eliminating some sales tax exemptions in exchange for tax cuts to personal income and corporate income taxes, among other changes.
Republican leaders in Louisiana argue the changes eased the tax burden on Louisianans overall. They also say the state sales tax alone is comparatively low, and that local sales taxes bump Louisiana up in the rankings.
But critics say raising the sales tax rate put a greater burden on Louisiana’s poorer residents.
At 5%, Louisiana’s state sales tax rate was 32nd in the nation as of Jan. 1, according to the Tax Foundation. Meanwhile, it has an average local sales tax rate of 5.11%, the highest in the country, the organization’s report says.
Many states do not have local sales taxes. But in Louisiana, local governments have come to rely more heavily on them, said Steven Procopio, president of the Public Affairs Research Council of Louisiana, a nonpartisan good government group.
That’s because the state’s homestead exemption, which makes the first $75,000 of a home’s market value untaxable, weakens property tax bases and makes it difficult for local governments to raise revenue through them, Procopio said. As a result, they’ve turned to sales taxes, he said.
Louisiana House Speaker Phillip DeVillier, R-Eunice, argued that Louisianans are better off now than they were in 2016, when the state sales tax was also at 5%, because the 2024 overhaul lowered other taxes
“That’s phenomenal,” DeVillier said.
How taxes changed
In 2024, the state passed legislation adopting a flat income tax of 3%. Previously, individual income tax rates were 1.85% on earnings under $12,500, 3.5% on earnings between $12,500 and $50,000, and 4.25% for earnings over $50,000.
To ensure those changes wouldn’t overburden workers in the lowest income bracket, lawmakers also more than doubled the standard deduction to $12,500, Procopio said.
Other changes included eliminating the corporate franchise tax, adding a standard corporate income tax deduction of $20,000 and flattening the corporate income tax rate to 5.5%. The state previously had a graduated system, with the rates ranging from 3.5% to 7.5%.
The state also got rid of some corporate tax breaks and imposed taxes on digital goods such as streaming and games.
In 2024, Louisiana’s state sales tax rate was 4.45%. Without the overhaul, Louisianans would have seen that rate go down to 4% in 2025, when a 0.45% temporary sales tax was set to expire.
Instead, lawmakers raised the rate to 5%, though they also passed legislation that will lower it to 4.75% in 2030.
Sales taxes face criticism
Jan Moller, executive director of Invest in Louisiana, a Baton Rouge-based progressive think tank, panned the state’s reliance on sales taxes as “regressive,” in that poor people tend to spend a higher percentage of their incomes on sales taxes than wealthy people do.
“Let’s be very clear about what the legislature did in late 2024: they cut taxes on large profitable corporations and wealthy households and they made up some, but not all, of the revenue by raising the most regressive tax that we have,” Moller said. “The result is a tax structure that was already regressive has become more regressive.”
DeVillier noted that Louisiana exempts essential items from state sales taxes, including groceries, prescription drugs and home utilities.
Those measures reduce the regressivity of sales taxes, said Procopio.
Gov. Jeff Landry has publicly said he hopes to lowe the personal income tax further—perhaps to zero. Asked whether the Legislature planned to make more cuts during the legislative session that begins March 9, DeVillier said his long-term goal is to reduce taxes further—but the state ought to be careful not to move too quickly.
“I would caution anyone going into further tax reforms before we see a full cycle of the tax reforms we put in place,” he said.
The state also must contend with an anticipated budget shortfall in the coming years, according to a budget presentation from Landry’s office, which shows that rising costs are expected to contribute to a shortfall of $329 million in the 2028 fiscal year, and a nearly $1 billion shortfall in 2030.
Also contributing to the shortfall is a state law that will divert motor vehicle sales tax revenue from the state’s general fund, where it can be used for general operating expenses, to a special fund used to pay for infrastructure improvements, according to Procopio. In 2030, a 0.25% reduction in the state sales tax rate is slated to further widen the gap between the state’s expenses and revenues, he said.
Photo credit: CRobertson/iStock
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© 2026 The Times-Picayune | The New Orleans Advocate. Visit www.nola.com. Distributed by Tribune Content Agency LLC.
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Tags: louisiana, Sales Tax, sales taxes, Tax Foundation, Taxes
