New Orleans, Louisiana 2021-06-22 23:31:41 –
Baton Rouge (AP) — Governor John Bel Edwards has signed an important part of a complex tax swap plan to free Louisiana’s income tax withholding from federal tax payments, but still to take effect this fall Requires voter approval.
Proposals awaiting a decision in the October vote will remove the federal income tax personal and corporate tax deductions paid in exchange for lowering the state’s income tax rate. Louisiana will also permanently abolish the corporate franchise tax for small businesses and reduce the tax rates for other businesses.
The Democratic governor announced late Monday that he had signed the bill. However, this package requires a ballot constitutional amendment to be passed before the tax exchange takes place.
In Louisiana, taxpayers can deduct the federal income tax they pay from their state income tax calculations. As federal income taxes rise, Louisiana collects less state tax. Lower federal income taxes increase state taxes.
The law will revoke that link, a long-standing goal of tax professionals, economists and others.
In exchange for losing the tax deduction, taxpayers receive a personal income tax rate of 2% to 1.85% for the first $ 12,500 of net income. The tax rate on the next $ 37,500 income will drop from 4% to 3.5%, and the tax rate on income above $ 50,000 will drop from 6% to 4.25%.
On the enterprise side, this proposal will abolish current rates in the range of 4% to 8%. In exchange for lost tax deductions, the state imposes a 3.5% tax rate on businesses’ initial $ 50,000 income. 5.5% of revenues above $ 50,000 and up to $ 150,000. 7.5% of revenue over $ 150,000.
Louisiana Tax Bills Signed, but Need Voter Approval in Fall Source link Louisiana Tax Bills Signed, but Need Voter Approval in Fall