Louisiana’s 3% flat rate since 2025
Louisiana replaced its graduated brackets with a single 3% rate for tax years beginning on or after January 1, 2025. A gain is taxed at 3% once it reaches Louisiana taxable income, so $50,000 of added income costs $1,500 before credits. The older graduated tables still shown on the Department of Revenue site belong to earlier years.
Residence decides how much of the gain Louisiana reaches. A resident reports income from everywhere and may claim a credit for tax paid to another state on the same income; a nonresident or part-year resident figures the tax on all income and then keeps only the Louisiana-source share. Moving away does not end Louisiana domicile by itself, so a sale shortly after a move deserves a residency check.
Louisiana’s new flat rate does not replace source allocation
The Louisiana Department of Revenue’s individual guide states that the rate is 3% for tax years beginning on or after January 1, 2025. Its page also displays older graduated tables for earlier periods. A current worksheet should use the current annual rule rather than choose a percentage from the historical column.
The resident instructions require reporting all income and describe a possible credit for tax paid to another state when that income is included. Nonresident and part-year instructions use Louisiana-source income and an all-source income ratio. A temporary absence does not automatically change Louisiana domicile, so residence needs to be established from the applicable facts.
A full-year resident with independently prepared Louisiana taxable-income amounts can use the 3% base comparison before credits. Nonresidents, part-year filers and taxpayers with changing credits should use the complete final-liability comparison. Keep the state-source and credit worksheets with both versions of the return. A gross sale price is not a Louisiana taxable-income base.
Louisiana preparation checklist
- Current 3% annual rate rather than old tables
- Domicile and all-source resident reporting
- Nonresident ratio and other-state credits