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Pass-Through Entity (PTE) Election

The Louisiana Department of Revenue (DOR) has amended the tax regulations regarding the amendment of rates for taxpayers making a PTE election pursuant to Louisiana Revised Statutes Annotated Section 47:287.732.2. Under the statute, an S corporation or entity taxed as a partnership for federal income tax purposes may elect to be taxed for Louisiana income tax purposes as if the entity had been required to file an income tax return with the IRS as a C corp.

The amended regulation implements the statute and stipulates that the tax on the Louisiana taxable income of every entity that makes the election will be computed at the rate of 1.85% upon the first $25,000 of Louisiana taxable income; 3.5% upon the amount of Louisiana taxable income above $25,000 but not in excess of $100,000; and 4.25% upon the amount of Louisiana taxable income above $100,000. The amended regulation is applicable for taxable periods beginning on or after January 1, 2022.

Corporate Income Tax Changes

The Louisiana DOR has amended the tax regulations to repeal the deduction of federal income taxes paid for purposes of calculating corporate income taxes, decrease the number of tax brackets applicable to corporation income tax, and lower the rates of corporation income tax. The amended regulation is applicable for taxable periods beginning on or after January 1, 2022.

The updated corporation income tax rates are as follows:

  1. 3.5% upon the first $50,000 of Louisiana taxable income;
  2. 5.5% on the amount of Louisiana taxable income above $50,000 but not in excess of $150,000;
  3. 7.5% on the amount of Louisiana taxable income above $150,000.

If you have questions or need assistance, please reach out to our State & Local Tax Team at FORVIS or submit the Contact Us form below.

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