Louisiana — Corporate Income / Franchise Tax

Louisiana currently imposes only a corporate income tax on corporations doing business in the state. The state previously operated a dual tax structure—imposing both a corporate income tax on Louisiana taxable income and a franchise tax on taxable capital—but the franchise tax was repealed effective for taxable periods beginning on or after January 1, 2026.

Current structure: income tax only

As of January 1, 2026, Louisiana levies a flat 5.5% corporate income tax on the Louisiana taxable income of every C corporation (and other entities taxed as corporations for federal income tax purposes) that derives income from Louisiana sources or does business in the state. The corporate income tax is Louisiana's sole corporate-level tax on doing business; no separate franchise, capital stock, or net worth tax applies to taxable periods beginning on or after January 1, 2026.

Historical dual structure (through 2025)

For taxable periods beginning before January 1, 2026, Louisiana imposed both:

1. Corporate income tax on Louisiana taxable income (at graduated rates of 3.5% to 7.5% through 2024, then a flat 5.5% rate beginning January 1, 2025); and

1. Franchise tax on taxable capital (capital stock, surplus, undivided profits, and borrowed capital employed in Louisiana), imposed at $2.75 per $1,000 of taxable capital in excess of $300,000 for taxable periods beginning on or after January 1, 2023.

The franchise tax was levied on domestic corporations for the right to exist as a corporate entity under Louisiana law and on both domestic and foreign corporations for enjoying corporate privileges in Louisiana. A corporation was subject to franchise tax if it qualified to do business in Louisiana, exercised its charter in the state, or owned or used any capital, plant, or property in Louisiana, whether directly or indirectly through a partnership or joint venture.

Repeal legislation

Acts 2024, 3rd Ex. Sess., No. 6 (H.B. 3), signed by Governor Jeff Landry on December 4, 2024, repealed Louisiana Revised Statutes Title 47, Chapter 2 (Corporation Franchise Tax), effective for taxable periods beginning on or after January 1, 2026. Calendar-year corporations paid franchise tax for the final time on their 2025 returns (covering the period January 1, 2025 through December 31, 2025, with a May 15, 2026 filing deadline). Fiscal-year corporations with taxable periods beginning before January 1, 2026 and ending in 2026 paid franchise tax for that final pre-repeal period.

The repeal was part of comprehensive tax reform legislation enacted during the November 2024 Third Extraordinary Session that also flattened the corporate income tax to 5.5% (effective January 1, 2025), flattened the individual income tax to 3%, and expanded the sales tax base to include digital products and services.

Source: Acts 2024, 3rd Ex. Sess., No. 6 (H.B. 3), repealing La. R.S. 47:601 et seq., Louisiana Department of Revenue FAQ – Corporation Franchise Tax Repeal, La. R.S. 47:287.12 (corporate income tax rate)

Louisiana imposes a flat 5.5% corporate income tax rate on Louisiana taxable income for taxable periods beginning on or after January 1, 2025. This rate replaced the prior graduated rate structure, which had three brackets ranging from 3.5% to 7.5%. The flat rate applies to C corporations and other entities taxed as corporations for federal income tax purposes.

Source: La. R.S. 47:287.12, as amended by Act No. 5 (H.B. 2), 2024 Third Extraordinary Session, Louisiana Department of Revenue FAQ

Louisiana repealed its corporation franchise tax effective for taxable periods beginning on or after January 1, 2026. Prior to repeal, the franchise tax was imposed annually on domestic and foreign corporations doing business in Louisiana at graduated rates on taxable capital (capital stock, surplus, undivided profits, and borrowed capital employed in Louisiana). The repeal was enacted as part of comprehensive tax reform legislation signed in December 2024.

Source: Acts 2024, 3rd Ex. Sess., No. 6 (H.B. 3), La. R.S. 47:601, repealed eff. Jan. 1, 2026

Foreign corporations organized under the laws of a state other than Louisiana that derive income from Louisiana sources are required to file Form CIT-620 (Louisiana Corporation Income Tax Return), regardless of whether any tax is owed. The 2025 Louisiana Corporation Income Tax Return instructions state: "Foreign Corporations – Corporations organized under the laws of a state other than Louisiana that derive income from Louisiana sources must file Form CIT-620 whether or not there is any tax liability." This filing requirement applies even when the corporation has no net tax liability after deductions, credits, or apportionment.

Form designation change effective 2025

Louisiana renamed the corporation tax return from "Form CIFT-620" (Corporation Income and Franchise Tax Return) to "Form CIT-620" (Corporation Income Tax Return) for taxable periods beginning on or after January 1, 2025. The form name change reflects the repeal of the Louisiana corporation franchise tax, which was eliminated effective for taxable periods beginning on or after January 1, 2026. For the 2025 tax year, the form covered both income tax and the final year of franchise tax; beginning with the 2026 tax year, the form covers only corporation income tax.

Electronic filing mandate

Louisiana Administrative Code 61:III.1503 and 1505 require electronic filing of Louisiana corporation income tax returns for corporations with total assets of $500,000 or more. Although the regulations reference the former "Form CIFT-620" designation, the electronic filing mandate continues to apply to the renamed Form CIT-620. The 2025 form instructions confirm that corporations meeting the asset threshold must file electronically.

Source: Form CIT-620, 2025 Louisiana Corporation Income Tax Return Instructions, pp. 2–3

Louisiana multistate corporations engaged in manufacturing, merchandising, or other business not subject to special industry formulas use a three-factor apportionment formula consisting of the equally weighted arithmetic average of property, payroll, and sales ratios. The property ratio compares Louisiana immovable and corporeal movable property to total property used in producing net apportionable income. The payroll ratio compares Louisiana salaries and wages to total compensation. The sales ratio compares net sales made in the regular course of business and other gross apportionable income attributable to Louisiana to the total. Service enterprises where property is not a substantial income-producing factor use a two-factor formula averaging only payroll and gross apportionable income ratios.

Source: La. R.S. 47:287.95(F)(1) and (D)

Louisiana determines corporate income tax nexus under a facts-and-circumstances "doing business" standard rather than bright-line economic thresholds. All corporations and entities taxed as corporations for federal income tax purposes that derive income from Louisiana sources must file Form CIFT-620, regardless of whether any tax is ultimately owed. This filing requirement applies to both domestic corporations (organized under Louisiana law) and foreign corporations (organized under the laws of other states).

No statutory factor-presence thresholds

Unlike many states that have adopted economic nexus standards with specific dollar thresholds for property, payroll, or sales, Louisiana has not enacted factor-presence nexus legislation. House Bill 518, introduced in the 2023 Regular Session, proposed establishing bright-line thresholds ($50,000 of property, $50,000 of payroll, $500,000 of sales, or 25% of total activity in Louisiana), but the bill died in committee and never became law. Louisiana's nexus standards remain grounded in jurisprudence and the constitutional "doing business" test rather than statutory thresholds.

Physical presence activities

Physical presence in Louisiana creates nexus at any income level. Activities that establish nexus include maintaining an office, warehouse, or other real property in the state; employing personnel who work or solicit business in Louisiana; storing inventory in Louisiana (including through third-party fulfillment centers); or exercising corporate charter or management functions within the state. Even a single employee performing services in Louisiana may create sufficient nexus to require filing.

Public Law 86-272 protection

Federal Public Law 86-272 may protect out-of-state corporations from Louisiana income tax if their only activity in Louisiana is the solicitation of orders for tangible personal property, the orders are approved outside Louisiana, and the goods are shipped from outside Louisiana. This federal protection applies only to income tax and only to sales of tangible personal property—it does not cover sales of services, digital products, intangibles, or real property. Importantly, P.L. 86-272 did not protect corporations from Louisiana's franchise tax prior to the franchise tax repeal effective January 1, 2026; a corporation could have franchise tax nexus even when protected from income tax.

Economic presence without physical nexus

Louisiana courts and administrative authorities may assert nexus based on economic presence—significant revenue derived from Louisiana customers, licensing intangible property for use in Louisiana, or systematic exploitation of the Louisiana market—even when the taxpayer lacks physical presence. Louisiana has not officially adopted the Multistate Tax Commission's factor-presence nexus model, but the state's "doing business" jurisprudence permits nexus findings based on purposeful economic activity directed at Louisiana. The determination is inherently fact-specific, turning on the frequency, quantity, and systematic nature of the taxpayer's contacts with Louisiana.

Practical application

Because Louisiana provides no safe-harbor thresholds, corporations must evaluate nexus based on the totality of their Louisiana activities. Any corporation with employees, property, or regular business operations in Louisiana should presume nexus exists. Corporations relying solely on P.L. 86-272 protection should confirm that their activities are limited strictly to solicitation of orders for tangible personal property and that no employees perform non-protected activities such as installation, training, or post-sale service in Louisiana.

Source: Louisiana Department of Revenue FAQ – Filing Requirement for Foreign Corporations, Louisiana Department of Revenue – Corporation Income & Franchise Taxes

Louisiana does not require or permit combined reporting for affiliated corporate groups. Each corporation engaged in business in Louisiana must file a separate Louisiana corporate income tax return (Form CIT-620), regardless of whether the corporation files a federal consolidated return with affiliated entities.

Separate company filing with formulary apportionment

Louisiana's default methodology requires each corporation to compute its own Louisiana taxable income using formulary apportionment under La. R.S. 47:287.95. A multistate corporation apportions its net income to Louisiana using a three-factor formula (property, payroll, and sales) applied to that corporation's own income—not the combined income of an affiliated group. Each member of an affiliated group files its own return reporting its separately computed Louisiana apportionable income, even when those corporations are part of a federal consolidated return.

When a corporation is included in a federal consolidated return, the Louisiana return instructions require the corporation to compute its Louisiana taxable income as if it had filed a separate federal return. The 2025 Form CIT-620 instructions state: "If the corporation is included with affiliates in a consolidated federal income tax return, or is not a Subchapter C corporation for federal income tax purposes, enter the net income that would have been reported on the federal return if the corporation had been required to file an income tax return with the Internal Revenue Service on a separate Subchapter C corporation basis."

Optional separate accounting method

As an alternative to formulary apportionment, La. R.S. 47:287.94(E)–(F) permits a taxpayer to apply to the Louisiana Secretary of Revenue for permission to use the separate accounting method to compute Louisiana-source income. Separate accounting is not the same as combined reporting; it is a transactional method that traces specific income and expenses to Louisiana rather than using apportionment factors. The taxpayer bears the burden of demonstrating that formulary apportionment produces a "manifestly unfair result" and that separate accounting would more equitably determine Louisiana-source income. Conversely, the Secretary may require a taxpayer to switch from apportionment to separate accounting when apportionment produces a manifestly unfair result.

Secretary's allocation authority under La. R.S. 47:287.480

La. R.S. 47:287.480(2) grants the Louisiana Department of Revenue authority to "allocate income and deductions among taxpayers" when necessary to prevent tax evasion or clearly reflect income. This provision authorizes the Department to adjust transactions between related entities—for example, by reallocating intercompany royalties, management fees, or interest payments—but it does not authorize the Department to require combined reporting or to ignore separate corporate existence. The statute is a related-party adjustment mechanism analogous to IRC § 482, not a combined reporting mandate. Courts and practitioners have debated whether La. R.S. 47:287.480 permits the Department to compel combined or consolidated reporting; the statutory text itself does not expressly authorize combined returns, and the references in the statute to "separate accounting method as set forth in R.S. 47:287.94" confirm that separate company filing remains the norm.

No ownership threshold or water's-edge election because combined reporting does not exist

Because Louisiana does not have a combined reporting regime, there is no statutory ownership threshold for including entities in a combined group, and there is no water's-edge versus worldwide election. These concepts exist only in states that have adopted combined reporting (such as California). In Louisiana, each corporation files separately based on its own income and its own apportionment factors, and intercompany transactions are respected unless the Department invokes its adjustment authority under La. R.S. 47:287.480.

Legislative consideration of combined reporting

Louisiana has considered but never enacted combined reporting. The Louisiana Department of Revenue and academic commentators analyzed combined reporting proposals in 2001 and 2018, discussing potential unitary business definitions, water's-edge elections, and transition issues, but no combined reporting statute was enacted. Louisiana continues to operate on a separate-company-filing basis with formulary apportionment (or optional separate accounting) as the methods for determining Louisiana-source income.

Source: La. R.S. 47:287.94 (Apportionment and separate accounting), La. R.S. 47:287.95 (Apportionment formula), La. R.S. 47:287.480 (Special adjustments by the secretary), Form CIT-620 Instructions (2025), p. 13

Louisiana corporate income tax begins with federal taxable income as the starting point, then applies Louisiana-specific modifications to arrive at Louisiana taxable income. The computation follows a four-step process: (1) determine federal taxable income under IRC rules; (2) apply Louisiana modifications to federal gross income; (3) apply Louisiana modifications to federal deductions; and (4) apply Louisiana-specific deductions including the federal income tax deduction and net operating loss deduction.

Starting point: federal taxable income before state modifications

La. R.S. 47:287.65 defines "net income" of a corporation as "the taxable income of the corporation computed in accordance with federal law for the same accounting period and under the same method of accounting, including statutorily required accounting adjustments, subject to the modifications specified in this Part." Louisiana thus adopts federal taxable income—computed under the Internal Revenue Code for the same tax year and using the same accounting method—as the base for Louisiana corporate income tax, before Louisiana-specific modifications. This starting point is federal taxable income after federal deductions (including the federal net operating loss deduction) but before any Louisiana modifications.

Corporations filing a federal consolidated return with affiliates must compute Louisiana net income as if they had filed a separate federal return. The 2025 Form CIT-620 instructions state: "If the corporation is included with affiliates in a consolidated federal income tax return, or is not a Subchapter C corporation for federal income tax purposes, enter the net income that would have been reported on the federal return if the corporation had been required to file an income tax return with the Internal Revenue Service on a separate Subchapter C corporation basis."

Modifications to federal gross income (La. R.S. 47:287.71)

La. R.S. 47:287.71(A) requires corporations to add to gross income determined under federal law, unless already included, specified items. La. R.S. 47:287.71(B) requires corporations to subtract from gross income determined under federal law, unless already excluded, specified items. The statute does not enumerate a comprehensive list of every possible addition; instead, it cross-references items required to be added by other provisions of Louisiana tax law.

Key subtractions from federal gross income (La. R.S. 47:287.71(B)) include:

• $20,000 deduction for all corporate taxpayers (La. R.S. 47:287.71(B)(9)): "An amount equal to twenty thousand dollars for any taxpayer subject to the corporation income tax levied pursuant to the provisions of R.S. 47:287.11." This deduction was enacted by Acts 2024, 3rd Ex. Sess., No. 5 (H.B. 2) and applies to taxable years beginning on or after January 1, 2025.
• Income received by a nonresident business for disaster or emergency-related work during a declared state disaster or emergency (La. R.S. 47:287.71(B)(8))
• Interest income and dividend income to the extent of the deduction allowed by La. R.S. 47:287.738
• Exclusions from Subpart F income as required by La. R.S. 47:287.71(B)(7)
• Other items specifically enumerated in subsections (B)(1) through (B)(9)

Key addition to federal gross income: Interest on obligations of states other than Louisiana is included in Louisiana gross income (by virtue of not being excluded). Louisiana excludes from gross income only interest on obligations issued by Louisiana or its political subdivisions (La. R.S. 47:287.738(C)), but taxes interest on other states' bonds.

Modifications to federal deductions (La. R.S. 47:287.73)

La. R.S. 47:287.73(A) provides that "the deductions from federal gross income allowed by federal law shall be modified by the deletions and additions specified herein." The statute authorizes both deletions (removing deductions federal law allows) and additions (allowing deductions federal law does not allow or allowing them in different amounts).

Additions to federal deductions (items Louisiana allows as deductions even though federal law does not, or allows in different amounts) include:

• Bonus depreciation and amortization election (La. R.S. 47:287.73(C)(6) and 47:287.744, effective for taxable years beginning on or after January 1, 2025): Louisiana permits corporations to elect a deduction for bonus depreciation under IRC § 168(k) and amortization under IRC § 197(a) that federal law allowed but that the taxpayer elected not to claim for federal purposes, or that federal law limited. The election is made annually and allows the corporation to claim bonus depreciation for Louisiana purposes even when not claimed federally.
• Depletion for oil and gas wells (La. R.S. 47:287.73(C)(2) and 47:287.745): Louisiana allows the greater of cost depletion or 22% percentage depletion (limited to 50% of net income from the property), which may differ from the federal depletion deduction.
• Intangible drilling and development costs (La. R.S. 47:287.73(C)(3) and 47:287.743): Louisiana allows these costs as a deduction as provided by statute, which may differ from federal treatment.
• Expenses disallowed by IRC § 280C (La. R.S. 47:287.73(C)(4)): For taxable years beginning before January 1, 2025, Louisiana allowed as a deduction expenses that would otherwise be deductible under federal law but for the disallowance provisions of IRC § 280C (relating to certain expenses for which tax credits are allowable). This provision was repealed by Acts 2024, 3rd Ex. Sess., No. 5 for taxable years beginning on or after January 1, 2025.
• Additions required by the provisions of Subpart F (La. R.S. 47:287.73(C)(5))

Federal income tax deduction (La. R.S. 47:287.85)

Louisiana permits a deduction for the portion of federal income tax attributable to Louisiana net income (La. R.S. 47:287.85(C)). This deduction—unusual among states—allows corporations to deduct the federal income tax they pay on income that Louisiana also taxes. The statute states that corporations may "claim as a deduction in computing net income that portion of the federal income tax levied with respect to the Louisiana net income, which is applicable to the year for which the Louisiana return is filed, regardless of the method of accounting utilized."

The deductible amount is the federal income tax liability (including federal alternative minimum tax to the extent it is attributable to Louisiana income) multiplied by a fraction. For a corporation that files a separate federal return, the fraction is Louisiana net income over total federal taxable income. When a corporation is included in a consolidated federal return, the regulations at LAC 61:I.1123 specify the apportionment methodology: total federal income tax shown on the consolidated return is apportioned to the Louisiana member based on the member's share of consolidated income, then further apportioned based on the ratio of Louisiana income to the member's total income.

Net operating loss deduction (La. R.S. 47:287.86)

La. R.S. 47:287.86 permits corporations to carry forward Louisiana net operating losses indefinitely for losses arising in taxable years beginning on or after January 1, 2001. The NOL deduction in any carryforward year is limited to 72% of Louisiana net income (before the NOL deduction). Louisiana does not permit NOL carrybacks for losses arising in taxable years beginning on or after January 1, 2001.

The Louisiana NOL is computed separately from the federal NOL. A corporation must determine its Louisiana-specific net operating loss by starting with federal taxable income, applying Louisiana's modifications to gross income and deductions under La. R.S. 47:287.71 and 47:287.73, and then applying Louisiana's apportionment rules (for multistate corporations). Federal NOL carryforwards do not automatically carry over to Louisiana; the corporation must track a separate Louisiana NOL.

Louisiana taxable income (La. R.S. 47:287.69)

La. R.S. 47:287.69 defines Louisiana taxable income as Louisiana net income after the adjustments and deductions specified in the corporate income tax statutes. For single-state corporations doing business only in Louisiana, Louisiana taxable income equals Louisiana net income (federal taxable income as modified by La. R.S. 47:287.71, 47:287.73, and other provisions, less the federal income tax deduction and the NOL deduction). For multistate corporations, Louisiana net income is apportioned to Louisiana using the apportionment formula in La. R.S. 47:287.95 to determine Louisiana taxable income—the tax base to which the 5.5% corporate income tax rate applies.

Source: La. R.S. 47:287.65, La. R.S. 47:287.69, La. R.S. 47:287.71, La. R.S. 47:287.73, La. R.S. 47:287.85, La. R.S. 47:287.86, Acts 2024, 3rd Ex. Sess., No. 5 (H.B. 2), Form CIT-620 Instructions (2025), p. 13

Louisiana corporate income tax returns are due on or before May 15 for calendar-year taxpayers, or on or before the fifteenth day of the fifth month following the close of the fiscal year for fiscal-year taxpayers. If the due date falls on a Saturday, Sunday, or legal holiday, the return is due on the next business day.

Automatic extension: six months or federal extended due date, whichever is later

For taxable periods beginning on or after January 1, 2022, Louisiana grants an automatic extension of time to file the corporate income tax return, provided the taxpayer timely requested an extension from the Internal Revenue Service to file the federal return for the same period. The extension period is six months from the original Louisiana due date, or the extended due date of the federal income tax return, whichever is later. No separate Louisiana extension form is required; the taxpayer must mark the box on Form CIT-620 (Louisiana Corporation Income Tax Return) indicating that a federal extension was timely requested for the same taxable period.

La. R.S. 47:287.614(D)(4) provides: "For taxable periods beginning on or after January 1, 2022, the secretary shall grant an extension of the time to file a Louisiana income tax return provided that the taxpayer timely requested an extension from the Internal Revenue Service to file the federal return for the same period." The extension is conditioned upon the filing of the required return within the extension period; if the return is not filed within the extension period, there is no extension and any delinquent filing penalty is computed from the original due date.

Extension for filing only — payment due on original due date

The extension is for filing only and does not extend the time to pay the tax due. La. R.S. 47:287.614(D)(1) authorizes the secretary to grant "a reasonable extension of time for filing returns," not an extension of time to pay. Louisiana Administrative Code 61:III.2503(C) confirms: "A filing extension granted by the secretary only allows for an extension of time to file the tax return. The extension does not allow an extension of time to pay the tax due. To avoid interest and penalty assessments, income and franchise taxes due must be prepaid on or before the original due date."

Payments received after the original return due date are subject to interest and late payment penalty, even when the taxpayer has a valid extension to file. The Louisiana Department of Revenue states: "This is only an extension to file and NOT an extension of time to pay the tax due. Payments received after the return due date will be charged interest and late payment penalty."

Federal extension requirement and documentation

To obtain the Louisiana automatic extension, the taxpayer must have timely requested a federal extension for the same taxable period. The regulations at La. Admin. Code tit. 61, § III-2503(B) provide that for taxable periods beginning on or after January 1, 2022, the secretary grants an automatic extension for the same period as the federal extension, or six months, whichever is later, with no state extension request required. However, the taxpayer must mark the extension box on the Louisiana return and should retain documentation of the federal extension (such as IRS Form 7004 or evidence of automatic extension).

If the IRS denies a federal extension request, the Louisiana extension becomes null and void, and delinquent filing penalties are assessed from the original due date. If a taxpayer requests reconsideration of a denied federal extension and it is subsequently approved, the taxpayer must attach all required IRS documents to the Louisiana return along with evidence of the approved reconsideration.

Estimated tax payment requirement

Louisiana corporations that reasonably expect their Louisiana income tax liability for the year to be $1,000 or more are required to make quarterly estimated income tax payments under La. R.S. 47:287.654. The extension to file the return does not eliminate the requirement to pay estimated taxes during the year or to remit any remaining balance due by the original return due date to avoid interest and penalties.

Source: La. R.S. 47:287.614, La. Admin. Code tit. 61, § III-2503.pdf), Louisiana Department of Revenue - Corporation Income & Franchise Taxes (Extensions)