US Louisiana raises sales tax to 5% Jan 2025

1 January 2025 state increases sales tax rate from 4.45% to 5%

Louisiana’s House Bill 10, effective 1 January 2025, has increase the current state-level tax from 4.45% to 5%.

The state is also extending sales tax to digital services at the start of January.

Louisiana sales tax compliance

Louisiana sales tax is calculated by combining a state-level rate with local rates, resulting in one of the highest average sales tax burdens in the U.S. The state imposes a base rate of 5% on most retail sales, leases, rentals, and services. Local jurisdictions, such as parishes and municipalities, can add their own rates, which often range from 5% to 8%, creating combined rates of up to 11% in some areas.

To calculate sales tax, the taxable sale amount is multiplied by the combined sales tax rate. For example, if a sale totals $100 in a jurisdiction with an 11% rate, the tax is $11, making the total bill $111.

Thresholds and exemptions apply to certain transactions. For example, food for home consumption, prescription drugs, and utilities are typically exempt from the state sales tax. However, local taxes may still apply to these items, creating variations.

Businesses are required to collect and remit sales tax based on the location of the sale or delivery. Louisiana employs a destination-based tax system, meaning the tax rate is determined by the buyer’s location. Businesses must file and pay taxes monthly, quarterly, or annually depending on their revenue thresholds. Compliance is crucial to avoid penalties.

US Sales Tax rates and selling thresholds