Louisiana State Sales Tax Rate Update
Table of Contents
What’s Changing?
Starting January 1, 2025, Louisiana implemented several significant changes to its sales tax structure:
- State Sales Tax Rate Increase: The state sales tax rate will increase from 4.45% to 5%.
- Expanded Tax Coverage: Sales tax will now apply to certain digital products and services, including:
- Digital audiovisual works
- Digital audio works
- Digital books
- Digital codes
- Digital applications and games
- Digital periodicals and discussion forums
- Sales Tax Exemptions Expanded: The existing state exemption for feminine hygiene products and diapers will now extend to local jurisdictions.
The Details on the Rate Change
- The new 5% state sales tax rate will remain in place for five years and will reduce to 4.75% in 2030.
- Louisiana previously experienced a similar sales tax rate of 5% from May 1, 2016, until it dropped to 4.45% on July 1, 2018.
- Originally, the sales tax rate was set to decrease further starting July 1, 2025, but recent legislative action reversed this plan.
Why Is This Happening?
The changes are part of a larger tax reform package passed during a special legislative session in late 2024. This package includes other measures such as lowering income taxes, increasing the standard deduction, and eliminating the corporate franchise tax.
What Should Businesses Do?
If your business collects and remits Louisiana sales tax, here’s what you need to do:
- Prepare to update your tax systems to reflect the 5% rate and newly taxable digital products starting January 1, 2025.
- Ensure you apply the expanded local exemption for feminine hygiene products and diapers.
- Communicate these changes to your staff and ensure they are equipped to handle inquiries from customers.
At TaxCloud, we handle sales tax compliance so you don’t have to worry about staying up to date with changes. If you’re already a TaxCloud user, there’s nothing you need to do — our internal API will automatically update to accommodate the new rate and tax coverage.
For more information, feel free to contact our support team at service@taxcloud.com.