What’s Taxable in Louisiana? Now, Just About Everything

Katherine Mullen
April 13, 2016

This blog was last updated on June 27, 2021

On March 14, 2016, House Bills 61 and 62 (Acts 25 and 26 respectively) were signed into law by Louisiana Governor, John Bel Edwards. The first of these bills expands the sales tax base in Louisiana to encompass nearly every previously excluded transaction, and many, if not most, previously exempt transactions. The second bill enacts a new code section that increases the sales and use tax rate by one percent. While these were by no means the only changes made during the 2016 First Extraordinary Session of the Louisiana Legislature, they were two of the broadest, most complex pieces of legislation to pass. Background on Taxation in the Bayou State Previously, under Louisiana law, the combined state tax rate of 4% was administered under four separate sections, all with the same definitions, exclusions, and exemptions. Under the law as amended by Acts 25 and 26, the various sections imposing the different pieces of the combined state tax are administered differently, creating a mixed bag of fully exempted or excluded items, fully taxable items, and items that are taxable under certain sections, but not others; further, some provisions under certain sections expire on July 1, 2016, while other provisions are effective until July 1, 2018. Items Subject to New Tax Rates: Newspapers to Numismatic Coins While not an exhaustive list, below are some of the noteworthy changes. These will change to a reduced rate effective July 1, 2016, and will return to being fully exempt effective July 1, 2018 barring any change:

  • Newspapers
  • Insulin
  • Orthotics and prosthetics
  • Prescription eyeglasses and contact lenses
  • Wheelchairs and wheelchair lifts sold by prescription
  • Medical devices
  • Patient aids for home use prescribed by a physician
  • Custom software and mandatory services related thereto
  • Gold, silver, or platinum bullion; numismatic coins
  • Storm shutter devices
  • Membership fees to nonprofit civic associations
  • Pollution control equipment not used in the manufacturing process
  • Occasional sales

The changes effected by Acts 25 and 26, is impressively broad despite their intricacy and varied effective dates, and should bring much needed revenue to the state of Louisiana.  Ultimately, the state is taxing just about everything that it is constitutionally permitted to tax in order to raise revenue and bridge budgetary gaps. What About Sales Tax Holidays? In fact, these bills have eliminated the weather preparedness sales tax holiday that generally takes place in May. Some exemptions will still be available for manufacturing machinery and equipment, such that these items will be subject to a 2% rate until July 1, 2016, when they will become subject to a 1% rate; they will return to being fully exempt effective July 1, 2018. Further, there will be some reprieve from tax for the usual back to school sales tax holiday in August, and the usual Second Amendment sales tax holiday in September; however, these holidays will not offer full exemptions as they have in the past. Items purchased during the August and September sales tax holidays will be subject to a 3% tax rate. Services are among the only things that remain tax free in Louisiana. At Sovos, we stay up to date as all these changes occur. Our large tax department researches every change before we change our system and we are here to break it down for you clearly and answer all your questions. Check out our webinars, subscribe to our blog, state of compliance newsletter, or speak with one of our experts to stay in the know.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Katherine Mullen

Katherine Mullen is a Regulatory Counsel at Sovos. Within Sovos’ Regulatory Analysis function, Katherine researches U.S. transaction tax. Katherine holds a B.A. in English Literature from McGill University, an M.S. in Library Science from Simmons College and a J.D. from Suffolk University School of Law. Katherine is a member of the Massachusetts Bar.
Share this post

2025 tax filing season
North America Tax Information Reporting
November 21, 2024
Top 5 FAQs to Prepare for the 2025 Tax Filing Season

This blog was last updated on November 21, 2024 While “spooky season” may be over for most of us, the scariest time of year for many businesses is right around the corner: tax filing season. As they brace themselves for the flood of forms, regulatory updates, and tight deadlines, the fear of missing a critical […]

dtc shipping law updates
North America ShipCompliant
November 13, 2024
DtC Shipping Laws: Key Updates for Alcohol Shippers

This blog was last updated on November 13, 2024 When engaging in direct-to-consumer (DtC) shipping of alcohol, compliance with different state laws is paramount and so keeping up with law changes is critical. In 2024, the rules in several states for DtC have already been adjusted or will change soon. Here is a review of […]

sales tax vs. use taxes
North America Sales & Use Tax
November 8, 2024
Sales Tax vs. Use Tax, Explained. Who Reports What, and When?

This blog was last updated on November 19, 2024 One of the core concepts in sales tax compliance is also one of the most frequently misunderstood: the differences between sales tax and use tax. These tax types may look similar on the surface, but knowing the differences is essential for staying compliant and avoiding costly […]

2025 bond project
North America Tax Information Reporting
November 4, 2024
2025 NAIC Bond Project – The Insurer’s Guide

This blog was last updated on November 14, 2024 The regulatory landscape for insurance companies is undergoing significant changes with the Principles-Based Bond Project which is set to take effect on January 1, 2025. These changes, driven by the National Association of Insurance Commissioners (NAIC), will impact how insurance companies classify and value bond investments, […]

E-Invoicing Compliance EMEA VAT & Fiscal Reporting
November 1, 2024
VAT in the Digital Age Approved in ECOFIN

This blog was last updated on November 7, 2024 The long-awaited VAT in the Digital Age (ViDA) proposal has been approved by Member States’ Economic and Finance Ministers. On 5 November 2024, during the Economic and Financial Affairs Council (ECOFIN) meeting, Member States unanimously agreed on adopting the ViDA package. This decision marks a major […]