The 2021 Louisiana Legislative Session convened on April 12, 2021 and closed on June 10, 2021. Important legislation from the fiscal session includes a number of bills directed to simplifying tax collection and reducing tax burdens and well as a few miscellaneous bills that impact property owners. The bills that will impact business and real estate interests are summarized below.
HB 199 – Act 131: HB 199 proposes a constitutional amendment to create the State and Local Streamlined Sales and Use Tax Commission to provide for streamlined electronic filing, electronic remittance, and collection of all sales and use taxes levied within the state of Louisiana, which will replace the current fragmented system of collections by individual cities and parishes. Louisiana is one of only four states that lacks unified sales tax administration.
SB 161 – Act 389: SB 161 makes the following changes to the Louisiana corporation franchise tax:
- continuing the suspension of the tax on the first $300,000 for small businesses until July 1, 2023.
- reducing the rate of the tax from $3.00 to $2.75 per $1,000 of taxable capital over $300,000.
- further reducing rates based on future income and franchise tax collections.
The bill is contingent on the enactment of HB 159, HB 278 and HB 292 (see below).
HB 292 – Act 396: HB 292 proposes a constitutional amendment to repeal the federal income tax deduction and replace that with a reduced number and reduced rates of Louisiana corporate income tax brackets from 5 brackets to 3 brackets with rates of 3.5% on income less than $50,000, 5.5% for income between $50,000 and $150,000 and 7.5% for income over $150,000.
HB 292 is contingent on adoption of SB 161 (see above), SB 159 (see below) and HB 278 (see below).
SB 159 – Act 134: This bill sets a maximum individual tax rate of 4.75% and eliminates the constitutional mandate for the federal income tax deduction.
HB 278 -Act 395: This bill reduces the rates for calculating individual income tax from 2% to 1.85% on net income up to $12,500, from 4% to 3.5% on the next $37,500 of net income, and from 6% to 4.25% on any net income in excess of $50,000 and provides for further rate reductions based on future tax collections.
A statewide election for voter approval of all bills that would amend the Constitution is scheduled for October 9, 2021
Upshot: Commentators believe the above tax reforms will begin to simplify the state’s tax regulations and lessen residents’ tax burdens, and therefore make the state more competitive. According to the Tax Foundation, “swapping out the federal deduction in exchange for lowering tax rates allows the state’s ‘sticker price’ to more accurately reflect real tax burdens, and lessens the effect of federal tax changes on state revenue.”
Other Business and Real Estate Legislation
HB 143 – Act 129: This act proposes a constitutional amendment which requires that, when an increase in value of residential property subject to a homestead exemption in Orleans Parish is phased in for purposes of ad valorem taxation, the increase in the assessed value each year cannot exceed ten percent of the property’s assessed value in the previous year. This provision does not apply if the increase was due to construction or improvements. The amendment must be approved by the public in a statewide election.
Upshot: This provides protections to homeowners against rising taxes due to rising property values.
HB 400 – Act 27: This act provides that where one or more co-owners are absent or have not consented to a private sale, the court must order partition by private sale and prioritize a private sale to existing co-owners over partition by licitation or private sale to third parties. In this case, the sale price cannot be less than the appraised value (rather than two thirds of the appraised value).
Upshot: This should make partition easier for co-owners but this act did not address La. R.S. 9:1113 so courts will have to reconcile the statutes.
HB 451 – Act 30: This act allows insurers to provide credits and discounts on policies that provide wind coverage to owners certified to be in compliance with the fortified home and fortified commercial standards created by the Insurance Institute for Business and Home Safety.
Upshot: Commentators suggest that implementing the fortified home and fortified commercial standards created by the Insurance Institute for Business and Home Safety may be difficult and expensive but ultimately provides better protection against weather related losses.
Sports Betting – Acts 440, 80 and 142: These acts legalized sports betting in Louisiana for college and professional sports (as well as e-sports in some cases) at both physical locations and online. The acts provide for licensing and regulation of sports wagering activity. They also impose taxes on the activity and provide for how the tax revenue will be used.
Upshot: Legalization of sports betting provides opportunities for private business profits and revenue for the state.