(The Center Square) — The fate of Gov. Jeff Landry’s tax reform package could be in jeopardy.
House Speaker Phillip DeVillier, R-Eunice, was seen on the House floor counting votes for House Bill 9, which expands the list of taxed services.
It was clear many representatives would not vote favorably, so no vote was held. If any one of the sales tax expansion bills fail to pass, it poses problems for the whole package.
The Legislature cannot risk reducing state revenue so significantly without knowing that the revenue will be made up by other bills. For every dollar eliminated in tax breaks and income tax reductions, a dollar must be made up through expanded sales taxes or more businesses to tax.
Many of the bills have been passed and are progressing through the Legislature.
The Senate Revenue and Fiscal Affairs committee heard testimony today on House bills 21 and 25. On Tuesday, the committee will take up HB 1, HB 2, HB3, HB 7, HB 8, HB 10 and HB 11.
HB 1: Provides for a flat income tax rate of 3% for individuals, estates, and trusts, increases the standard deduction, and modifies or repeals certain income tax deductions and credits.
HB 1 was passed by the House by a vote of 87-12. The committee said that staff had been working on amendments over the weekend.
HB 2: Provides for a flat rate of 3.5% for the corporate income tax and terminates certain corporate income tax exemptions, deductions, and credits. HB2 was passed by the House 79-19.
An amendment was adopted to ensure that the Department of Economic Development reports annually on the number of businesses that have begun operating in the state since the reform.
Members of the House gathered to express their concern over the repeal of the motion picture tax credit program. Louisiana’s film industry incentives would end the motion picture production tax credit earlier than planned. Instead of accepting applications until 2031, the cutoff would be moved up to June 30, 2025.
Businesses and lobbyists also expressed concerns over the repeal of the historic rehabilitation credit and the digital media credit, as previously reported by The Center Square.
HB 3: Aims to repeal Louisiana’s corporation franchise tax starting in 2026, effectively eliminating the tax levied on businesses for operating in the state or holding assets there. HB 3 was passed by the House.
The current tax rate is $2.75 per $1,000 of taxable capital over $300,000, with an automatic reduction tied to revenue growth.
The bill also removes the ability to claim certain tax credits against the franchise tax, including incentives for research and development, digital media, child care, and historic rehabilitation projects. These credits will remain available for individual and corporate income taxes.
The repeal would take effect for tax periods beginning on or after January 1, 2026. The timeline was adjusted from earlier proposals, with the final effective date set by House amendments.
HB 7: Overhaul’s Louisiana’s Constitution Article 7, consolidates several funds and is required for the passage of several of the other bills, including HB 1, HB 5, HB 11 and HB 12.
The bill establishes a Government Growth Limit to control how much the state can increase spending from year to year. It sets a specific formula for calculating the limit based on prior fiscal year’s appropriations, plus a three percent increase for the 2025-2026 fiscal year.
This mechanism is designed to keep government spending in check, ensuring that it doesn’t exceed a certain threshold unless approved by the Legislature.
HB 7 passed the House 81-15.
HB 8: Expands the sales taxes to digital goods and is expected to generate some $40 million in revenue. Newly-taxable digital products include, but are not limited to, audio or audiovisual works, books, games, applications, periodicals, other information services and access to certain software services.
HB 8 was passed 80-19.
HB 10: Proposes the repeals many tax exemptions. Many provisions were ultimately removed from the bill.
HB 10 extends the 0.45% state sales tax rate but lowers it to 0.4%. It permanently suspends the 2% sales tax exemption for business utilities, repeals various sales tax exclusions while establishing new exemptions, and exempts prescription drugs from local taxes. It also allows local governments to offer a sales tax exemption on manufacturing machinery and equipment.
Amendments were also adopted to provide for exemptions for religious texts. HB 10 was passed 71-23.
HB 11: Codifies existing constitutional provisions on homestead exemptions, special assessments, and property tax exemptions into state statutes.
It maintains the current homestead exemption for the first $7,500 of assessed value and clarifies how property taxes are assessed and administered.
The law also introduces an optional property tax exemption for business inventory and redesignates sections of existing law. Key provisions include penalties for false claims related to property tax exemptions and clarifications on timing for claiming exemptions in Orleans Parish.
HB 11 was passed 79-17.
