Louisiana Corporate Income Tax has undergone massive transformation, making it one of the most business-friendly tax regimes in the South for 2026. The state replaced its complex graduated tax brackets with a straightforward 5.5% flat corporate income tax rate that applies to all Louisiana-sourced income for tax years beginning on or after January 1, 2025. This seismic shift eliminates the previous tiered structure (3.5% on the first $50,000, 5.5% on $50,000-$150,000, and 7.5% above $150,000) and introduces a $20,000 standard deduction—a game-changer for small and mid-sized businesses calculating their Louisiana corporate franchise tax alongside income tax. Even more exciting, Louisiana completely repealed the corporate franchise tax for periods beginning January 1, 2026, wiping out the $2.75 per $1,000 tax on capital stock that burdened balance sheets for decades. Whether you’re researching Louisiana C corporation tax rates, planning S corporation elections, or optimizing multi-state tax apportionment, this comprehensive guide covers rates, deductions, credits, filing deadlines, and strategic planning opportunities for the current tax year.
The New Flat 5.5% Rate Structure
Gone are the days of juggling three different tax brackets. Louisiana now applies a uniform 5.5% rate to all Louisiana taxable income after deductions. This flat rate simplifies tax planning dramatically.
Key features of the new system:
- Universal Application: Every dollar of Louisiana-sourced net income faces the same 5.5% rate
- $20,000 Standard Deduction: Automatically reduces federal taxable income before state calculations
- Bonus Depreciation Election: Corporations can immediately expense qualified property and R&D costs
Corporate Franchise Tax Repeal Impact
The franchise tax elimination represents billions in savings for Louisiana corporations. Previously calculated on capital stock, surplus, and undivided profits above $300,000, this tax affected:
- C Corporations doing business in Louisiana
- Financial institutions
- Out-of-state corporations with Louisiana nexus
Effective Date: Tax periods beginning January 1, 2026 (2025 filings are the final franchise tax returns)
Apportionment Formula Changes
Louisiana simplified its apportionment formula to a single sales factor, making the state more attractive for businesses with significant property and payroll outside Louisiana:
textLouisiana Taxable Income × (LA Sales / Total Sales) × 5.5%
This change particularly benefits:
- Service businesses with employees scattered across states
- Manufacturers with facilities outside Louisiana
- Tech companies with national customer bases
S Corporation Treatment Evolution
Major 2026 Change: S Corporations will no longer be taxed like C Corporations at the 5.5% rate. Instead:
- Entity-level tax eliminated for periods after January 1, 2026
- Composite returns now permitted
- Income flows through to shareholders at individual rates (3% flat rate)
Key Deductions And Credits
While many credits sunset in 2025, several remain valuable:
Standard Deduction: $20,000 automatic reduction
Bonus Depreciation: 100% immediate expensing election
Inventory Tax Credit: Extended through June 30, 2026
Sunset Credits (2025): Quality Jobs, Industrial Tax Exemption, Motion Picture credits
Filing Requirements And Deadlines
Form CIFT-620: Annual corporate income and franchise tax return
Due Date: 15th day of the 5th month after fiscal year-end (May 15 for calendar year)
Extensions: Automatic 6-month extension if federal extension filed
Estimated Payments: Required if liability exceeds $1,000
Strategic Planning Opportunities
The tax reform creates several planning angles:
- Timing Asset Purchases: Maximize 2025 bonus depreciation before potential federal changes
- S Corporation Elections: Consider timing for 2026 flow-through treatment
- Apportionment Optimization: Review customer location data for sales factor accuracy
- Credit Utilization: Use remaining credits before 2025 sunset dates
Multi-State Comparison
Louisiana’s 5.5% flat rate positions it competitively:
- Texas: No corporate income tax (but high sales tax)
- Mississippi: 5% corporate rate
- Tennessee: 6.5% (phasing to 0% by 2026)
- Florida: 5.5% capped rate
Frequently Asked Questions
Q: When does the franchise tax repeal take effect?
A: Tax periods beginning January 1, 2026. 2025 filings are final franchise returns.
Q: Can S Corporations still elect entity-level taxation?
A: No, effective 2026. Income flows through to shareholders at 3% individual rate.
Q: What happens to existing tax credits?
A: Many sunset after 2025, but inventory tax credit extends through mid-2026.