The Tax Foundation’s midyear report shows Louisiana has fallen from its spot as the highest average combined state and local sales tax rate. The state’s 9.547 percent average comes in just one-one-thousandth of a percent behind Tennessee’s. Vice President of State Projects with the Tax Foundation Jared Walczak said the two states have been neck and neck since Louisiana’s 2018 sales tax cut.
“A community here or there raising or lowering a sales tax rate, but basically both are about 9.55% average state and local rate.”
The Bayou state is expected to see its first sales tax cut since 2018 as a temporary 0.45% portion of the state sales tax is set to expire in July of 2025. Louisan currently ranks 37th in the nation with a 4.45% sales tax. Walczak said the reduction will be significant but not enough to bring Louisiana out of the top 5 combined averages in the nation.
“While this will still leave Louisiana with a high sales tax rate, it will definitively dip lower than Tennessee’s. This won’t just be a miniscule rounding error. There’ll be a real difference.”
Walczak commended legislators’ recent efforts to modernize the states antiquated tax system. Louisiana’s complex local sales tax collection system is a nightmare for businesses to navigate and while he said it may be better for the economy than some alternatives, rates are still too high.
“If you have to be high on one you’d prefer to be high on sales than income taxes for your overall economic competitiveness, but no matter how you do the balance, when you’re approaching ten percent, you’re high. You’re probably higher than you should be.”
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