(The Center Square) — Louisiana’s tax system now ranks 31st in the country for competitiveness, up six spots from last year, according to the Tax Foundation’s new 2026 State Tax Competitiveness Index. The group said the state improved after lawmakers approved major changes late last year.
The state also has been performing better on economic metrics. Immediately after the tax reforms, the state’s economy shrank slightly, but since then has reversed course. According to the Bureau of Economic Analysis, the state’s gross domestic product grew 4% and personal income grew 6.8% in the second quarter of 2025 — both higher than the national average.
Reforming the tax code was said to be crucial to bringing new economic growth to the state.
“We promised you that we would work on Louisiana’s economy. To do that, we knew that we have to overhaul our outdated and bloated tax code — giving people and businesses an incentive to come to Louisiana,” Republican Gov. Jeff Landry said after a 2024 special session. “We wanted to make our state more competitive, so we can attract more jobs and have higher wages.”
Over the span of 19 days, the legislature enacted a flat 3% individual income tax, cut the corporate income tax to 5.5% and set the state sales tax at 5% through 2029 (dropping to 4.75% in 2030). Lawmakers also voted to repeal the corporate franchise tax starting Jan. 1 and expanded sales taxes to some digital goods.
Those changes helped Louisiana jump in two key parts of the Index: The state now ranks No. 15 for individual income taxes and No. 10 for corporate taxes, the Tax Foundation reports.
But Louisiana remains last (No. 50) on sales taxes, reflecting both rate and structure, and sits No. 22 on property taxes and No. 9 on unemployment insurance taxes. Overall standing could rise again next year once the franchise tax repeal takes effect.
For households, the new law raises the standard deduction to $12,500 for single filers and $25,000 for married joint filers starting in 2025, which means more income is tax-free before the 3% rate applies.
The Tax Foundation grades states on how simply and neutrally taxes are structured across five areas — income, corporate, sales, property and unemployment taxes — giving more weight to areas where states differ the most.
The franchise tax repeal begins in 2026, and other clean-up items tied to the 2024 package continue to roll out. The Tax Foundation says those steps could further lift Louisiana’s ranking if lawmakers don’t add new carve-outs or complexity.
