Repeals the state tax levied on the net income of individuals and estates and trusts (OR DECREASE GF RV See Note)

House Bill 253 repeals the state income tax levied on individuals and estates and trusts, effective for taxable years beginning on or after January 1, 2027. The bill amends R.S. 47:31 and 241 to remove references to individuals, residents, nonresidents, estates, and trusts from the tax code, leaving only corporations and certain trusts subject to income taxation. Specifically, the bill repeals R.S. 47:32(A), which contained the tax rate and levy on individual net income, along with R.S. 47:295(A), 300.1, and 300.2, which provided administrative provisions for individual and estate income taxation. The revised statute language limits the income tax to corporations, domestic real estate investment trusts, foreign real estate investment trusts, and capital construction funds, eliminating all tax obligations on wages, salaries, investment income, and other earnings of individuals and on the income of estates and trusts.

This legislation eliminates income tax liability for all Louisiana residents and nonresidents whose income derives from personal employment, investments, or other individual sources, while also removing the tax burden from estates and trusts. Individuals who currently file Louisiana income tax returns will no longer owe state income tax beginning with the 2027 taxable year. Employers and financial institutions will no longer be required to withhold state income taxes from employee wages or report individual income to the state. The bill substantially reduces the tax base available to support state government operations and services, as individual income taxes represent a significant portion of state general revenue. Estates and trusts that previously paid tax on their income will no longer do so, benefiting beneficiaries and fiduciaries.

The bill operates within Louisiana's income tax framework established in Title 47 of the Louisiana Revised Statutes. The existing statute R.S. 47:31 sets forth which entities are subject to tax; this bill narrows that category by removing individuals, residents, nonresidents, estates, and trusts. The repealed sections previously established the 3 percent tax rate on individual net income, deductions and exemptions specific to individuals, and administrative procedures for assessment and collection. By contrast, corporate income taxation remains intact under the amended statute, along with provisions for real estate investment trusts and capital construction funds, which receive special tax treatment under federal law. The legislation does not address potential impacts on Louisiana constitutional provisions governing taxation or the dedication of revenues to specific purposes, nor does it provide offsetting revenue measures or implementation procedures for withholding system modifications.