Sales tax plays an important role in Louisiana’s economy and budget. The state has a complicated sales tax system with state, parish, and municipal sales taxes that can result in high combined rates in some areas. Understanding Louisiana’s sales tax laws, rates, exemptions, and administration is crucial for businesses and consumers in the state. This comprehensive guide provides an overview of everything you need to know about Louisiana sales tax.
Louisiana Sales Tax Calculator
Maintaining proper documentation and using the right tax rates is key to sales tax compliance in Louisiana. You can also use our handy Louisiana sales tax calculator to calculate Louisiana sales tax. Just select your county and Louisiana sales tax calculator will automatically calculate sales tax for you location.
Louisiana Sales Tax Calculator
Louisiana State Sales Tax
Louisiana has a 4.45% state sales tax that applies to most retail sales of tangible personal property and some services. The state sales tax was adopted in 1938 and generates significant revenue that helps fund state government operations and services.
Some notable features of Louisiana’s state sales tax include:
- It applies to retail sales of tangible personal property unless specifically exempted.
- Certain services like hotel occupancy, utility services, and repairs to tangible personal property are also subject to state sales tax.
- Food for home consumption, prescription drugs, and residential utilities are exempt from state sales tax.
- Use tax at the same 4.45% rate applies to purchases made out-of-state and brought into Louisiana for use.
- Various sales tax holidays provide temporary exemptions on certain items like hurricane preparedness supplies.
The state sales tax rate has increased over time from its original 2% rate. The most recent 0.45% rate increase occurred in 2018.
Parish and Municipal Sales Taxes
In addition to the state sales tax, local sales taxes are imposed by Louisiana’s 64 parishes and many municipalities. These local sales taxes consist of:
Parish Sales Taxes
- All 64 parishes in Louisiana levy their own sales tax at varying rates. Parish sales tax rates range from 1% to 5%, with most between 2-4%.
- Parish sales taxes apply to the same transactions as the state sales tax.
- Revenues help fund parish government operations and services.
Municipal Sales Taxes
- Around 300 Louisiana cities, towns, and villages also impose a municipal sales tax.
- Municipal rates range from 0.25% to 5% on top of parish and state sales taxes.
- The highest combined state and local rates are in New Orleans (11.35%) and Lafayette (10.45%).
- Municipal sales taxes fund city and town budgets.
Louisiana does not allow the state sales tax rate to be lower than the combined local rates in any area. State sales tax applies statewide regardless of whether a parish or municipality levies a sales tax.
Total Louisiana Sales Tax Rates
Adding up the state, parish, and municipal sales tax rates results in total sales tax rates that vary widely across Louisiana:
- Highest total rate: 11.35% in New Orleans
- Lowest total rate: 4.45% in Cameron Parish
- Average total rate: 8-9%
Some of the highest combined Louisiana sales tax rates include:
- New Orleans – 11.35%
- Lafayette – 10.45%
- Alexandria – 10.2%
- Shreveport – 9.7%
- Baton Rouge – 9.45%
Sales tax rates are capped at 11.2% under Louisiana’s Uniform Local Sales Tax Code. But grandfathered higher rates in New Orleans and Lafayette still apply.
Consumers and businesses should look up the total tax rate based on their parish and municipality to know the applicable sales tax. The Louisiana Department of Revenue provides a sales tax rate by address lookup tool on its website.
Common Louisiana Sales Tax Exemptions
Louisiana provides sales tax exemptions that remove the sales tax from certain types of transactions:
Common Exemptions
- Food for home consumption: Groceries like meats, produce, dairy, etc. are exempt from state and local sales taxes. Prepared foods are only exempt if purchased unheated.
- Residential utilities: Electricity, water, natural gas, and other utilities for residential use are exempt from sales tax. Business utilities are still taxed.
- Federal food stamp purchases: Items purchased with food stamp benefits are exempt from sales taxes.
Other Exemptions
- Educational materials like textbooks
- Fertilizers and pesticides for agricultural use
- Sales to charitable organizations with IRS 501(c)(3) status
- Sales of bakery products for home consumption
- Sales of livestock feed and seeds used for planting crops
The extensive list of Louisiana sales tax exemptions is found in the Revised Statutes 47:305. Any exemptions are narrowly defined by the language in the statutes.
Sellers must obtain exemption certificates from qualified buyers to administer certain exemptions. Consumers using exemptions like groceries and prescriptions do not need exemption certificates at the point of sale.
How to File and Remit Louisiana Sales Tax
Louisiana has specific requirements for sales tax filing and remittance:
- Monthly filing is required for retail dealers with over $200 per month in sales tax liability. Quarterly and annual filing thresholds also exist.
- Online filing through the Louisiana Sales Tax Returns system is mandatory for most taxpayers. Paper returns have been eliminated.
- Due date is the 20th of the month following the reporting period. For monthly returns, this is the 20th of the next month.
- Prepayments of a portion of each month’s sales tax are required for larger taxpayers. Prepayments are due on the last day of the filing month.
- Electronic payments are required at the time of filing. No paper checks are accepted. Payment methods include ACH credit, ACH debit, and credit card.
In addition to filing sales tax returns, retailers must also maintain resale certificates taken from customers claiming exemptions. Records should be kept for at least three years.
There are penalties for late filing, late payment, and fraud. Taxpayers can request waivers for late fees caused by events outside their control.
Properly understanding Louisiana sales tax filing and payment requirements is essential for retailers. Using a reputable sales tax management software can help automate much of the process.
Sales Tax Enforcement and Audits
The Louisiana Department of Revenue administers sales tax compliance and enforcement. Typical enforcement actions include:
- Audits – Both field audits at a business and desk audits occur regularly to review records and identify unreported tax liabilities.
- Tax deficiency assessments – Assessments are issued for underpaid or unremitted sales tax identified during audits or reviews. Interest and penalties apply.
- Taxpayer appeals – Taxpayers can administratively appeal tax deficiency assessments before paying them. An appeals process exists.
- Tax liens – Unpaid sales tax debts result in liens against a business’s assets and property. Liens also damage credit.
- Seizures – For the most egregious cases of nonpayment, seizures of assets or bank accounts may occur to satisfy tax debts.
The Department of Revenue encourages voluntary disclosure of past-due tax liabilities before an audit occurs. Penalty waivers or reductions are possible.
taxa fraud like intentionally undercharging sales tax is subject to severe criminal penalties beyond just repayment of tax due. Business owners should ensure full sales tax compliance.
Sales Tax Compliance Tips for Louisiana Businesses
Louisiana sales tax may be complex, but some tips can help businesses stay compliant:
- Use the correct sales tax rate for each taxing jurisdiction. Check rates regularly for changes.
- Carefully document transactions and exemptions claimed by purchasers.
- Remit all tax collected from customers and don’t divert it for other purposes.
- File returns and pay timely to avoid penalties and interest.
- Review financial records and books annually for sales tax errors.
- Follow proper procedures for closing out a business and final sales tax compliance.
- Consult with an experienced Louisiana sales tax accountant or attorney when unsure.
Technology like a sales tax software solution can also automate compliance where possible. Investing in professional expertise and technology solutions can improve sales tax outcome.
Conclusion
In summary, Louisiana has a unique sales tax environment that demands knowledge of state and local taxes to remain compliant. Both consumers and businesses in Louisiana need to account for the variable parish and city sales taxes imposed around the state.
There are also many sales tax exemptions in Louisiana that exclude certain goods and services from taxation. Understanding these exemptions is important for retailers.
Using all the available resources and tools can help taxpayers properly report, file, and remit Louisiana sales taxes. But the complexities also mean that expert guidance is recommended. Overall, a strong working knowledge of Louisiana sales tax laws and administration is invaluable for anyone selling taxable goods or services in the state.
FAQs
Why is Louisiana sales tax so high?
Louisiana has one of the highest average combined state and local sales tax rates due to relatively high state rates plus allowances for local parishes and cities to levy their own sales taxes up to 7%.
What is sales tax on food in Louisiana?
Food for home consumption is exempt from state sales tax but may be taxed locally up to 3%. Prepared foods are taxed at full state + local rates.
What city in Louisiana has the highest sales tax?
New Orleans has the highest sales tax in Louisiana at 11.45%, composed of 4.45% state, 7% local.
Why does Louisiana have 2 taxes?
Louisiana has a state and local sales tax rather than just one tax to allow parishes and municipalities to collect their own portion for local expenses and services.
