Understanding Recent Changes in Louisiana State Sales Tax Legislation

During the recent 2016 First Extraordinary Session of the Louisiana Legislature, several changes were made to Louisiana tax law.  The changes made in an effort by legislators to eliminate the current fiscal year’s deficit and close the projected shortfall for next year may impact your organization

Act 25 (House Bill 61) and Act 26 (House Bill 62) were adopted and signed into law by the Governor.  These Acts impose an additional one percent (1%) to our Louisiana state sales tax rate – increasing the tax rate from 4% to 5%.  This additional state sales tax is levied upon the sale at retail, use, consumption, distribution, lease or rental of tangible personal property and upon the sale of certain services.  The effective day for Act 25 and Act 26 is April 1, 2016.

The Acts also reduce or eliminate many exemptions and exclusions included in the state law.  This will result in some items that were previously classified as exclusions and exemptions to become actively taxable.

Some of the changes taking place April 1, 2016 are summarized below:

  • A new one-cent sales and use tax takes effect, increasing the state sales tax from four cents to five cents; the extra penny remains in effect until June 30, 2018, in most cases, but expires on July 1, 2016, for manufacturing equipment and machinery
  • Most current exemptions and exclusions on the 4 percent state sales tax are eliminated; all exclusions will be restored by July 1, 2018
  • An automobile rental tax, which had expired, is reinstated on gross proceeds at the rate of 2.5 percent (state) and 0.5 percent (local)
  • A hotel tax, with revenue flowing to local governments, is expanded to include residential locations such as houses, apartments and condominiums
  • Sales made in Louisiana by dealers outside the state (such as over the Internet) are subject to the collection and remittance of sales and use tax
  • The excise tax on cigarettes increases to $1.08
  • The excise tax on alcoholic beverages increases to:
    • Liquor – $0.80 per liter
    • Sparkling wine – $0.55 per liter
    • Still wines with 14-24 percent alcoholic volume – $0.35 per liter
    • Still wines with more than 24 percent alcoholic volume – $0.55 per liter
    • Malt beverages – $12.50 per barrel
    • Low alcoholic content beverages – $12.50 per barrel
  • A discount for accurately reporting and remitting excise taxes on certain tobacco products is reduced from 6 to 5 percent
  • A discount for accurately reporting and remitting excises taxes on alcoholic beverages and beer is reduced from 2 percent to 1.5 percent for low-content beverages; and from 3.3 percent to 2.5 percent for high-content beverages
  • Membership fees or dues paid to a nonprofit, civic organization which provides access to clubs or the privilege of having access to amusement, entertainment, athletic, or recreational facilities are subject to state sales tax

For more information, read:

If you have questions related to the new legislation and information released by the Department of Revenue, please contact our office at 225-928-4770.