2024 Tax Package Propositions

Proposed Constitutional Changes

Significant re-write of Article VII, which deals with fiscal matters and dedicated funds

Passage would require 2/3 vote of the Legislature and approval of majority of voters in a statewide election

• Require local sales tax exemption on prescription drugs (already exempted from state sales tax)

• Change vote requirement for enactment of tax incentives to 2/3 vote

• Double the standard income tax deduction for persons 65+

• Eliminate certain funds (Education Excellence, Quality Education, and Support) and designate other constitutional funds as “Program Funds,” which could be changed by a 2/3 vote of the Legislature, without the need for a constitutional amendment (Conservation Fund, Hospital Stabilization Fund, Artificial Reef Fund, Louisiana Medical Assistance Trust Fund, etc.)

• Budget Stabilization Fund (“Rainy Day Fund”)- change dedications/increase cap

• Phase out the Revenue Stabilization Fund

• Create an optional inventory tax exemption, allowing local government to decide whether or not to tax inventory, and providing for a one-time payment out of the Revenue Stabilization Fund to local governments that choose to exempt inventory from ad valorem taxation

• Mandates a one-time payment to UAL and mandates a one-time teach pay raise

• Permits the Legislature to provide for expenditure limit calculation in statute

• One-time rate reduction for personal income tax

Individual Income Tax Changes

Passage would require 2/3 vote of the Legislature; changes effective 1/1/25

• Flat tax rate of 3%

• Increases standard deduction to $12,500

• Doubles retirement exemption ($6k to $12k)

• Repeals the net capital gains deduction & IRC 280C

• Repeals deduction for blind persons, 65+, and dependents

• Growth based automatic rate reductions to phase out the income tax

Corporate Franchise Tax Changes

• Repeals the corporate franchise tax and respective credits, effective 1/1/26

Corporate Income Tax Changes

Passage would require 2/3 vote of the Legislature; changes effective 1/1/25

• Flat tax rate of 3.5%

• Eliminates tax credit and incentive programs, including the motion picture tax credit, Quality Jobs, Enterprise Zone, Digital Media, R&D, Angel Investor, Rehabilitation of Historic Structures, etc.)

Sales Tax Changes

Aligns state and local property tax bases, reforms exemptions/exclusions

Passage would require 2/3 vote of the Legislature; changes effective 1/1/25

• Mandates local exemption for prescription drugs

• Mandates local exemption for MM&E (manufacturing machinery & equipment)

• Exemption/exclusion overhaul, including repeals of multiple exemptions

• Removes 2025 sunset of .45% temporary sales tax

• Expands sales tax digital goods and services and additional professional and consumer services (see attached Bills 8-10)

• Among the services that would now be taxed under the new plan are

• replacement or installation of a heating or air conditioning unit; replacement or installation of roads, driveways, parking lots, patios, decks and sidewalks; lobbying services; private investigation services; remodeling services;

• security, protection, and bodyguard services; coin operated amusement devices like massage chairs, video games, pinball games, table games such as billiards and air hockey, and redemption games such as the claw and skeet ball that may award prizes of tangible personal property;

• parking, storing or keeping of motor vehicles; laundry, cleaning, pressing, alterations, repair and dyeing services; storage provided for boats and vessels of less than 50 tons; auto club services and fees;

• car wash services, including, but not limited to, washing, waxing, polishing, vacuuming and detailing of motor vehicles; installation, repair, and maintenance of taxable computer software; condominium time-share and exchange services; dating and social matching services and marriage bureaus;

• delivery, shipping, freight, and transportation associated with a taxable sale of tangible personal property or service; non-medical diet and weight reduction services, including commercial weight loss services not prescribed by a health care provider;

• information services furnishing newsletters, tax guides, research publications, financial, investment, circulation, credit, stock market, or bond rating reports, mailing lists, abstracts of title, news clipping services, wire services, scouting reports, surveys; bad check lists and broadcast rating services; subscriptions to genealogical, financial or similar databases.

• Global Positioning System services; interior decorating and design services; intrastate limousine, bus and van transportation services and taxi cab and rideshare services; landscaping, lawn care and horticultural services;

• linen supply services; mailing services; marina services; personal fitness training services; pet grooming, boarding, sitting, training and obedience services; photography and photographic studio services;

• photofinishing and film development; private process server services; public opinion and research polling services; quilting, embroidery, and monogramming services; repossession services; rest room operations and comfort station services; personal shopping services for individuals

• social event planning and coordination services and catering services; spa services, massages by massage parlors and steam baths; rental of space for meetings, conventions, short-term business uses, entertainment events, weddings, banquets, parties, and other short-term social events;

• skin tanning services; body modification services, including tattooing, piercing, scarification, and branding; travel and travel package services, including travel agents and travel clubs; warranty, extended warranty and service contracts; waste collection and disposal services.

Severance Tax Changes

Significant overhaul to how oil and gas is taxed

Passage would require 2/3 vote of the Legislature; changes effective 7/1/25

• Applies reduced severance rate of 6% to oil produced from new wells completed on or after 7/1/25

• Current wells will pay 12.5% until 7/1/35

• Converts oil to volumetric rate sec by Secretary of DNR every 6 months (applies to all wells starting 7/1/25)

• Applies rate of 6% to natural gas produced from new wells completed on or after 7/1/25

• Revises determination of volumetric rate for natural gas; will be updated every 6 months

• Allows horizontal well exemption for wells completed on or after 7/1/25, only if well is on the same regulatory unit approved horizontal well

• Allows deep well exemption for wells completed on or after 7/1/25 only if well is on same regulatory unit approved deep well

• Increases cap on severance tax payments to locals to $2.472M

• Revises dedications of mineral revenues