Louisiana’s improves ranking with conservative Tax Foundation

Since Gov. Jeff Landry took office in 2024, Louisiana has jumped 17 spots on the business friendly Tax Foundation’s state competitiveness index. Republican elected officials say the group’s rankings are a factor in where major corporations are willing to locate their facilities and offices.

The state ranked 40th in overall tax structure competitiveness in 2024 and will be ranked 23rd in 2027, according to the latest Tax Foundation report. The improvement is largely attributed to a tax law overhaul that Landry, a Republican, pushed three years ago.

In 2024, Landry and legislators lowered the state’s personal and business income tax rates and permanently eliminated Louisiana’s corporate franchise tax. As a result, Louisiana’s corporate tax ranking moved from 29th to tenth, and its individual income tax ranking moved from 27th to ninth, according to the Tax Foundation. 

In order to offset the decreased business and income tax collections, Landry and lawmakers raised the state sales tax rate from 4.45% to 5%. This contributed to Louisiana having the highest average combined state and local sales tax rate of 10.13%, according to the Tax Foundation. It ranked the state’s sales tax structure almost dead last at 49th. 

The organization said Louisiana would have an easier time lowering its sales tax rate if it applied the levy to a wider range to more services. The Landry administration attempted to extend the sales tax to a new range of services — lawn care and hair services, among others — in 2024, but legislators refused and opted for a higher rate instead. 

A high sales tax rate creates more of a burden for low-income people than higher income tax or business tax rates. Progressive groups, such as Invest in Louisiana, have been critical of the elected officials shifting the tax burden from income and business taxes to sales taxes.

When compared to adjoining states, Louisiana has a better Tax Foundation ranking than Arkansas (32nd) and Mississippi (27th), but it remains well behind Texas (fifth).