Louisiana’s tax system now ranks thirty first within the nation for competitiveness, up six spots from final 12 months, in keeping with the Tax Basis‘s new 2026 State Tax Competitiveness Index. The group mentioned the state improved after lawmakers permitted main adjustments late final 12 months.

The state additionally has been performing higher on financial metrics. Instantly after the tax reforms, the state’s financial system shrank barely, however since then has reversed course. In accordance with the Bureau of Financial Evaluation, the state’s gross home product grew 4% and private earnings grew 6.8% within the second quarter of 2025 — each larger than the nationwide common.

Reforming the tax code was mentioned to be essential to bringing new financial progress to the state.

“We promised you that we might work on Louisiana’s financial system. To do this, we knew that we have now to overtake our outdated and bloated tax code — giving folks and companies an incentive to come back to Louisiana,” Republican Gov. Jeff Landry mentioned after a 2024 particular session. “We needed to make our state extra aggressive, so we will appeal to extra jobs and have larger wages.”

Over the span of 19 days, the legislature enacted a flat 3% particular person earnings tax, minimize the company earnings tax to five.5% and set the state gross sales tax at 5% by 2029 (dropping to 4.75% in 2030). Lawmakers additionally voted to repeal the company franchise tax beginning Jan. 1 and expanded gross sales taxes to some digital items.

These adjustments helped Louisiana soar in two key elements of the Index: The state now ranks No. 15 for particular person earnings taxes and No. 10 for company taxes, the Tax Basis stories.

However Louisiana stays final (No. 50) on gross sales taxes, reflecting each fee and construction, and sits No. 22 on property taxes and No. 9 on unemployment insurance coverage taxes. Total standing may rise once more subsequent 12 months as soon as the franchise tax repeal takes impact.

For households, the brand new legislation raises the usual deduction to $12,500 for single filers and $25,000 for married joint filers beginning in 2025, which suggests extra earnings is tax-free earlier than the three% fee applies.

The Tax Basis grades states on how merely and neutrally taxes are structured throughout 5 areas — earnings, company, gross sales, property and unemployment taxes — giving extra weight to areas the place states differ essentially the most.

The franchise tax repeal begins in 2026, and different clean-up objects tied to the 2024 bundle proceed to roll out. The Tax Basis says these steps may additional carry Louisiana’s rating if lawmakers don’t add new carve-outs or complexity.