Louisiana LLC Taxes
By default, Louisiana LLCs are taxed as pass-through entities, so the LLC’s members pay the state’s graduated personal income tax on the business’s revenue. Members of an LLC are taxed at the 15.3% federal self-employment tax rate (12.4% for social security and 2.9% for Medicare) and pay a personal income tax rate between 1.85% and 6% at the state level. In addition, you’ll have to pay local taxes and the state’s sales and use tax. LLCs also offer the flexibility of electing S-corp or C-corp tax classification. Read on to learn more.
In this article, we’ll cover:
How Are Louisiana LLCs Taxed?
Your default Louisiana LLC tax status depends on how many owners/members your LLC has. Single-member LLCs (SMLLC) will file taxes as sole proprietorships, while multi-member LLCs file as partnerships. As a regular LLC with default tax classification, you don’t have to pay federal or state corporate income tax.
Here are the federal tax forms that LLCs need to file:
- Single-member LLC—Form 1040 (usually Schedule C, but some SMLLCsfile C-EZ, E, or F)
- Multi-member LLC—Form 1065
You can also choose or apply to have your LLC taxed as an S-corp or C-corp. Here’s what that means for you and your LLC:
Louisiana LLCs taxed as S-corp
LLCs taxed as S-corps avoid paying the 15.3% self-employment tax LLCs normally pay on dividends. Your LLC will keep its pass-through status. By filing IRS Form 2553, you can request to be considered for S-corp election by the IRS. Only US-originated companies with certain limits on shareholders and stock can become S-corps.
To submit your taxes as an S-corp, you’ll need to file Form 1120-S with the IRS. Applying for S-corp status is more difficult than filing with the default status. Always consult a tax professional before changing your LLC’s tax classification.
LLCs taxed as C-corp
LLCs also have the option of electing C-corp filing status, which is the default tax status for corporations. Though you won’t find many LLCs filing as C-corps, you may find it beneficial to your business’s growth. As a C-corp, your LLC can select more tax deductions that can bring in more investors to your LLC. The negative to filing as a C-corp is that you will have to pay both the 21% federal corporate income tax and Louisiana’s graduated corporate income tax.
To file your taxes with the IRS as a C-corp, you’ll need to submit Form 1120. Hire an accountant before changing your LLC’s tax status to C-corp to see if it would benefit your business.
Louisiana State Income Tax
In Louisiana, income tax is done on a graduated scale based on your taxable income. Rates and breakdowns are as follows:
|Louisiana Personal Income Tax Rate||Taxable Income|
|1.85%||Single: first $12,500
Married: first $25,00
|3.50%||Single: next $37,500
Married: next $75,000
|6%||Single: over $50,000
Married: over $100,000
Louisiana also has a graduated income tax filing for corporations and entities filing as corporations based on their net income during the year. Here’s how it’s broken down:
|Louisiana Corporate Tax Rate||Taxable Income|
|5%||on next $25,000|
|6%||on next $50,000|
|7%||on next $100,000|
|8%||any excess over $200,000|
You’ll also have to pay a corporate franchise tax in Louisiana if you elect C-corp status. The Louisiana corporate franchise tax is $1.50 for each $1,000 earned. Starting in 2023, that will go up to $2.75 for each $1,000. There’s a $110 initial corporation franchise tax as well.
Sales and Use Tax
The sales and use tax rate in Louisiana is 4.45% as of July 1, 2018. Since you’ll also pay a local sales and use tax, you’ll need to add that to your overall tax rate. The max you may have to pay is 11.45%. To learn more about Louisiana’s general sales and use tax, check out the General Sale & Use Tax page.
Local Louisiana Taxes
While you have to pay sales and use tax on the state level, each parish in Louisiana also has its own local sales tax rate you’ll have to pay on top of that. You’ll need to check your parish’s local rate to see what you’ll need to pay, but know the max is 7%. For example, Slidell has a 4.45% local sales tax rate, while Mandeville has a slightly higher sales tax rate of 4.75%.
Other Taxes in Louisiana
Your Louisiana tax obligation isn’t done yet! Here are some other taxes you might need to pay.
Louisiana State Employer Taxes
Most employers in Louisiana need to pay for workers’ compensation insurance and unemployment insurance tax.
- Unemployment Insurance (UI) Tax—As of 2022, the tax rate for unemployment insurance in Louisiana ranges from .09% to 6.20%.
- Workers’ Compensation—Louisiana employers are required to purchase workers’ compensation insurance for their employees. As a state-mandated policy, you’ll need to obtain workers’ compensation insurance even if you only have one employee. To get workers’ compensation insurance, you’ll need to sign up with a private insurer or request to be a self-insured employer.
To learn more about Louisiana employer taxes, visit the Louisiana Workforce Commission website.
The Louisiana Department of Revenue collects taxes from businesses in certain industries, including:
- Vapor retail
- Hazardous waste disposal
- Liquor and alcohol retail
- Tobacco retail
- Transportation and communication
Do foreign LLCs in Louisiana need to pay Louisiana taxes?
Yes. Louisiana foreign LLCs have to pay taxes just like domestic LLCs. A foreign LLC is one that was formed in another state but registers to do business within Louisiana. You’ll need to pay state taxes and any local taxes if you set up a physical location.