Lafayette, LA — The Louisiana House of Representatives voted 86-13 on Wednesday to approve a bill that could lead to significant tax cuts for residents, including a reduction in the state’s flat individual income tax rate and a new tax break for seniors. However, the bill’s provisions hinge on voter approval of a constitutional amendment that would shift hundreds of millions of dollars from reserve funds into the state’s general fund.
House Bill 667, which now moves to the Louisiana Senate, proposes lowering the state’s personal income tax rate from 3% to 2.75% starting on January 1, 2027, if voters approve the necessary constitutional amendment. The bill also includes a measure to offer residents aged 65 and older a larger income tax deduction, effectively doubling the current standard deduction for single filers, which is currently set at $12,500.
If the bill becomes law, the tax break for seniors could significantly reduce the amount of income tax they pay, providing much-needed relief to the state’s aging population. However, these changes can only occur if Louisiana voters approve a separate bill creating the constitutional amendment, which would need to pass by next year for the tax cuts to take effect in 2027.
The move follows a significant tax overhaul signed into law by Governor Jeff Landry late last year, which replaced the state’s previous tiered income tax system with a flat 3% rate, down from the highest rate of 4.25%. While lawmakers argue that lowering taxes will make Louisiana more attractive for businesses and retirees, critics are concerned about the long-term fiscal impact of these proposals.
The Legislative Fiscal Office estimates that the income tax rate reduction alone will decrease state revenue by $54.5 million in 2027, with the impact growing to $310.3 million in 2028 and remaining at around $250 million annually in subsequent years. The new senior tax break is projected to cost an additional $67.6 million in 2028, with costs increasing slightly in the following years.
Rep. Julie Emerson, a Republican from Carencro and the author of the bill, defended the proposal, arguing that it would provide much-needed tax relief to Louisiana residents, particularly seniors. She emphasized that neighboring states like Texas and Florida, which have no state income tax, are aggressively cutting taxes, and Louisiana must remain competitive to foster economic growth.
“We want to continue to lower those rates like the states around us have,” Emerson said. “Texas being at zero and Florida being at zero and our neighbors in Mississippi are getting on a pathway to zero income tax, I want Louisiana to keep up in order for our economy to continue to grow.”
Supporters of the bill argue that cutting income taxes will help stimulate the state’s economy, attract businesses, and make Louisiana a more appealing destination for retirees. By reducing the tax burden, they believe the state will be able to attract more workers and investors, ultimately leading to economic growth.
However, some lawmakers expressed concerns about the timing of the proposed tax cuts. Rep. Matthew Willard, a Democrat from New Orleans, questioned whether it was wise to implement further tax reductions so soon after the state’s income tax overhaul. Willard pointed out that the current tax rates had not been in effect for long enough to assess their full impact, and he worried that cutting taxes further could jeopardize the state’s ability to meet other financial obligations, such as teacher stipends and public services.
“The current tax rates haven’t even been in effect for half a year,” Willard said. “Don’t you think it would be more prudent to have more data for possibly a year or two?”
Emerson, however, remained confident in the state’s fiscal stability, citing the Revenue Stabilization Fund, which received over $1 billion last year, as a source of funding to offset the revenue losses from the proposed tax cuts.
Despite these reassurances, Willard also raised concerns about the broader economic context, particularly the potential for federal budget cuts and other uncertainties at the national level. The potential for federal policy changes to affect Louisiana’s revenue streams added another layer of unpredictability to the decision-making process.
“Is this a good time to make these decisions with so much uncertainty happening at the federal level right now?” Willard asked.
Emerson acknowledged the uncertainty but maintained that Louisiana could not afford to wait.
“Every year we debate these things, and there are always changes at the federal level,” Emerson said.
As the bill moves forward, it remains to be seen whether the Louisiana Senate will approve the proposal and whether voters will ultimately approve the constitutional amendment needed to fund the tax cuts. If all steps are completed, Louisiana residents could see a reduced tax burden beginning in 2027.