Louisiana’s ranking in the conservative think tank's Tax Foundation’s State Tax Competitiveness Index improved from 37th to 31st with further improvement expected as a result of the tax reforms improved last year.
Tax Foundation Senior Policy Analyst Manish Bhatt says lawmakers enacted sweeping reform, which included a new flat individual income tax rate of three percent and a corporate income tax rate of 5.5%.
“There’s still work to be done, but there’s no question that Louisiana is far more competitive now than it was last year, and I think the state will start seeing positive gains,” Bhatt said.
Bhatt expects Louisiana’s ranking to improve in 2026 as the state’s franchise tax will be repealed. He says modernizing a state’s tax structure helps position it for growth.
“Hopefully, these tax reforms can start seeing Louisiana recruit and retain the next generation of great Louisianians that are going to build businesses, that are going to invest in the state and are going to stay for a long period of time,” Bhatt said.
Bhatt says Louisiana could move up in their rankings even more, if it did sales tax reform.
“From centralization of sales taxes to ending a number of exemptions and broadening the base to include some services. Right now, Louisiana has the highest statewide and average local sales tax in the country. So, there’s significant room for improvement in that,” Bhatt explained.
Wyoming, South Dakota, New Hampshire, Alaska and Florida ranked in the top five. Maryland, Connecticut, California, New Jersey and New York ranked in the bottom five.