Louisiana
Reviewed October 2026Federal §453 conformity
Yes — Louisiana starts from the federal return and taxes installment gain as payments arrive, and the 2024 reform simplified the answer dramatically: a flat 3% individual rate from 2025, a larger standard deduction, and (for entity planning) a corporate overhaul that flattened the corporate rate and repealed the franchise tax. At 3%, Louisiana is now one of the cheapest income-tax states in the country for a large gain — anything modeled on the old brackets deserves a fresh run.
Nonresident sourcing
Gain from Louisiana real estate or a business operating in Louisiana is Louisiana income for sellers anywhere, and the payments keep that character; intangible gain generally follows the seller home.
Withholding
Louisiana imposes no closing-table withholding on nonresident real estate sellers. Pass-throughs handle nonresident owners through composite filing or agreements each recognition year unless an entity-level election covers it.
Selling, then moving (residency change)
Louisiana-source gain stays taxable here after a move; other gain travels with the seller, and no rule accelerates deferred gain at the border. At a 3% flat rate, Louisiana is rarely the reason anyone leaves.
Pass-through entity (PTE) tax election
Louisiana was an early adopter of the entity-level election back in 2019, and the reform simplified its math: an electing entity is taxed at the same flat 3% that individuals pay, so there is no rate spread either way. The election's value is the federal deduction it creates, net of the cost of running the election each year. One more 2026 change: S corporations are now treated as pass-throughs for Louisiana purposes unless they elect out, so the entity-held-note analysis starts from pass-through treatment. Re-model any standing election before the next recognition year.
Estate and IRD
Louisiana has no estate or inheritance tax, and it is a community property state: both halves of a married couple's community assets step up in basis at the first death. For married sellers of appreciated Louisiana property, the sequencing question — sale before or after that step-up — comes first. Louisiana's civil-law regime (forced heirship in limited cases, usufruct in place of common-law trusts' roles) makes local succession counsel part of the team, not an afterthought.
Planning notes
Louisiana's list: re-run any pre-reform projection at the 3% flat rate; re-model any standing PTE election at the 3% entity rate; put the community property sequencing question first for married sellers; and bring Louisiana succession counsel in early, because the civil law moves notes differently at death.
A flat 3% individual rate, a bigger standard deduction, corporate flattening, and franchise-tax repeal — projections and PTE elections built on the old brackets are stale. Re-run the numbers before relying on anything drafted pre-reform.
Educational information, current as of the October 2026 review. State law changes; confirm treatment with a qualified advisor before structuring a transaction.
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