Does Louisiana Tax Social Security and Retirement Income?

Louisiana does not tax Social Security

Social Security benefits are exempt from Louisiana income tax at every income level. The return starts from federal adjusted gross income, so the portion of benefits taxed federally (Form 1040, line 6b) is removed on Schedule E of Form IT-540 using code 07E. No age or income test applies. (Louisiana Department of Revenue, 2025 Form IT-540 instructions (lines 7-11, Schedule E codes 01E-07E and 20E, Worksheet for Code 06E, residency))

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

Government and military pensions are exempt; private pensions get a capped exemption at 65

Benefits from the Louisiana State Employees’ Retirement System and the Louisiana State Teachers’ Retirement System are fully exempt, as are benefits from the other Louisiana public systems whose statutes exempt them, including those for school employees, State Police, municipal and parochial employees, sheriffs, firefighters and police. The Department of Revenue publishes the list. A pension from another state’s public system is not on it and is treated like a private pension. (Louisiana Department of Revenue: Is there a list of retirement system benefits that may be excluded from Louisiana income tax?)

Federal retirement benefits are exempt in full under R.S. 47:44.2, and the Department states that this covers both military and nonmilitary federal retirees, along with payments from a military survivor benefit plan. On the 2025 return these amounts are subtracted on Schedule E with code 04E, state employee benefits with 02E, teacher benefits with 03E and other exempt systems with 05E. (Louisiana Department of Revenue, 2025 Form IT-540 instructions (lines 7-11, Schedule E codes 01E-07E and 20E, Worksheet for Code 06E, residency))

A private employer pension or a commercial annuity is taxable, with one exemption that starts at 65. For 2026 a person 65 or older can exempt up to $12,324 of annual retirement income, up from $12,000 in 2025 and $6,000 before the 2024 tax overhaul. The amount is now adjusted each year by the change in the Consumer Price Index. (Louisiana Department of Revenue, Revenue Information Bulletin 26-019: Inflation Adjustment to Standard Deduction and Retirement Income Exemption (September 28, 2026))

The exemption belongs to the person who receives the income. In the Department’s rule, a couple over 65 where one spouse has a $30,000 pension and the other only Social Security can claim one exemption amount, because the second spouse is not the plan participant. Where one has a $30,000 pension and the other a $4,000 annuity, the 2026 exemption is $12,324 plus $4,000, or $16,324. (Louisiana Register, September 20, 2026: LAC 61:I.1311, Annual Retirement Income Exemption for Individuals 65 or Older (final rule))

IRA and 401(k) withdrawals are taxed at 3%, less the age-65 exemption

Traditional IRA and 401(k) withdrawals are part of federal adjusted gross income and are taxed by Louisiana at 3%. They count as annual retirement income for the age-65 exemption: the worksheet for code 06E starts from each spouse’s own distributions on Form 1040, lines 4b and 5b, subtracts any government benefits already exempted under codes 02E to 05E, and allows the lesser of the remainder or the maximum. A person under 65 gets no exemption on these withdrawals. (Louisiana Department of Revenue, 2025 Form IT-540 instructions (lines 7-11, Schedule E codes 01E-07E and 20E, Worksheet for Code 06E, residency))

A Roth conversion is reported on the same federal line as other IRA distributions, so its taxable amount enters Louisiana income and is taxed at 3%. The exemption does not grow with the size of the conversion: once a person’s pension and IRA income for the year passes $12,324, every further dollar converted is taxed. A $100,000 conversion by someone who has already used the exemption adds $3,000 of Louisiana tax. (Louisiana Department of Revenue, 2025 Form IT-540 instructions (lines 7-11, Schedule E codes 01E-07E and 20E, Worksheet for Code 06E, residency))

One narrow deduction took effect for 2026: Act 251 of 2025 allows a deduction for a hardship distribution from a retirement account when the taxpayer, or a spouse on a joint return, has been diagnosed with a terminal illness. (Louisiana Department of Revenue, 2025 Regular Session Legislative Summaries (Acts 251 and 404))

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

Interest, dividends and capital gains are taxed at the flat 3%

Louisiana starts from federal adjusted gross income, so interest, ordinary and qualified dividends and capital gains are all included and taxed at 3%, with no lower rate for long-term gains. Interest and dividends from U.S. government obligations are subtracted on Schedule E (code 01E), including the identified government portion of a mutual fund’s distributions. (Louisiana Department of Revenue, 2025 Form IT-540 instructions (lines 7-11, Schedule E codes 01E-07E and 20E, Worksheet for Code 06E, residency))

The former deduction for net capital gains on the sale of a Louisiana business held at least five years is now limited to installment sales and sales perfected before January 1, 2025, so an owner selling a business today pays the 3% rate on the gain. (Louisiana Department of Revenue, 2025 Form IT-540 instructions (lines 7-11, Schedule E codes 01E-07E and 20E, Worksheet for Code 06E, residency))

Act 11 of the 2024 Third Extraordinary Session replaced Louisiana’s graduated brackets with a flat 3% rate for tax years beginning on or after January 1, 2025. It raised the standard deduction from $4,500 to $12,500 for single and separate filers, set it at twice that for joint filers, heads of household and surviving spouses, and repealed the $1,000 deductions for dependents and for people 65 or older or blind. (Louisiana Department of Revenue, 2024 Third Extraordinary Session Legislative Summaries (Act 11: flat rate, standard deduction, retirement exemption))

The standard deduction is indexed. For 2026 the Department, in a bulletin dated September 28, 2026, applied a 2.7% increase in the Consumer Price Index, giving $12,838 for single filers and married people filing separately and $25,676 for joint filers, heads of household and qualifying surviving spouses. There is no additional standard deduction for age. (Louisiana Department of Revenue, Revenue Information Bulletin 26-019: Inflation Adjustment to Standard Deduction and Retirement Income Exemption (September 28, 2026))

On the 2025 Form IT-540, the latest published, line 7 is federal adjusted gross income, or Louisiana adjusted gross income from Schedule E when there is exempt income; line 8 is the standard deduction; line 10 is taxable income; line 11 multiplies it by 0.03. The only itemized amount that carries over is the federal medical expense deduction in excess of the federal standard deduction (lines 9A to 9D). (Louisiana Department of Revenue, 2025 Form IT-540 instructions (lines 7-11, Schedule E codes 01E-07E and 20E, Worksheet for Code 06E, residency))

The main age-based break is the retirement income exemption: up to $12,324 in 2026 for each person 65 or older, set against that person’s own pension, annuity and IRA income. (Louisiana Department of Revenue, Revenue Information Bulletin 26-019: Inflation Adjustment to Standard Deduction and Retirement Income Exemption (September 28, 2026))

A larger break was proposed and did not happen. The constitutional rewrite on the March 29, 2025 ballot would have given people 65 or older a second standard deduction from 2026; legislative staff record that it was defeated, 65% to 35%. The 2026 inflation bulletin accordingly lists one standard deduction per filing status. (Louisiana Legislature, House Fiscal Division and Senate Revenue and Fiscal Affairs staff: 2024 State Tax Reform and Recent Federal Tax Updates (December 5, 2025))

On the property side, the special assessment level freezes the assessed value of a homestead for an owner 65 or older whose adjusted gross income is under the limit, which the St. Tammany Parish Assessor gives as $102,700 for 2026. The limit has been indexed to the Consumer Price Index since 2026, so it moves each year. (St. Tammany Parish Assessor: Do I qualify for a senior freeze? (2026 income limit))

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Louisiana's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which is the same wherever they live. The tax bracket calculator and the guide to taxes in retirement cover that side.

Tax Foundation figures drawn from Census data put Louisiana property taxes at 0.55% of owner-occupied home value in 2024, 38th among the states. Its parish figures range from 0.57% in Jefferson Parish and 0.63% in East Baton Rouge to 0.71% in St. Tammany and 0.85% in Orleans. These are comparative averages that already reflect the homestead exemption. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

The constitution sets assessed value at 10% of fair market value for land and for residential improvements, and requires reappraisal at least every four years. Millage rates set by parishes, school boards, cities and districts apply to assessed value, so a $400,000 home is assessed at $40,000. (Louisiana Constitution, Article VII, section 18: Ad Valorem Taxes (assessment percentages, reappraisal, special assessment level))

The homestead exemption removes the first $7,500 of assessed value, which is $75,000 of market value, from parish taxes on an owner-occupied home. The East Baton Rouge Parish Assessor estimates the saving at about $750 to $800 a year and notes two limits: the exemption does not apply to municipal taxes, and the owner must own and occupy the home by December 31 of the tax year. Bills go out in late November and are due by December 31. (East Baton Rouge Parish Assessor: General Information (homestead exemption, special assessment level, tax bills))

The special assessment level is a freeze on assessed value, not on the bill. It is open to homestead owners 65 or older, and to certain disabled owners, disabled veterans and military surviving spouses, whose federal adjusted gross income for the prior year does not exceed the limit: $100,000 in the constitution, indexed from tax year 2026. Millage increases still pass through, and the freeze ends if construction raises the value by more than 25% or when the home is sold. (Louisiana Constitution, Article VII, section 18: Ad Valorem Taxes (assessment percentages, reappraisal, special assessment level))

Two amendments on the November 3, 2026 ballot change this picture. Act 220 of 2025, put to voters as Amendment 9, raises the income limit for the special assessment level to $150,000 for tax years beginning on or after January 1, 2027, with inflation indexing resuming in 2028. Unofficial returns show voters approved it. (Louisiana Legislature, Act 220 of the 2025 Regular Session (HB 300): special assessment level income limit of $150,000)

Amendment 6 (Act 274 of 2026) lets a parish or municipality add a second exemption for owners 65 or older who qualify for the special assessment level, but only where local voters approve it. The amount rises with age: $6,000 of assessed value from 65, $12,000 from 69, $18,000 from 73, $24,000 from 77 and $30,000 from 81. It applies from tax year 2028; unofficial returns show voters approved this one too. (Louisiana Legislature, Act 274 of the 2026 Regular Session (HB 514): local-option additional exemption for owners 65 or older)

The state sales tax rate is 5%. It rose from 4.45% on January 1, 2025, and the Department of Revenue lists the 5% rate as in effect until December 31, 2029. (Louisiana Department of Revenue: What is the state sales tax rate?)

Under Act 11 of 2024 the state rate is scheduled to fall to 4.75% on January 1, 2030, when one of the four statutory levies that make up the rate drops from 1% to 0.75%. (Louisiana Legislature, House Fiscal Division and Senate Revenue and Fiscal Affairs staff: 2024 State Tax Reform and Recent Federal Tax Updates (December 5, 2025))

Parishes, cities and school boards add their own sales taxes, and they are large. As a comparative figure, the Tax Foundation puts Louisiana’s average local rate at 5.11% and its average combined rate at 10.11% as of January 1, 2026, the highest combined rate in the country. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figures))

Food bought for preparation and consumption at home, such as produce, meat, seafood, bakery items and packaged foods, is generally exempt from the state sales tax, while restaurant meals and other prepared food are taxed. The Department notes that local sales taxes may still apply to food that the state exempts, depending on where the sale occurs. (Louisiana Department of Revenue: Is there sales tax on food?)

Prescription drugs and residential electricity, natural gas and water are also outside the state sales tax; with food for home consumption these are the three exemptions written into the constitution. For drugs and medical devices the 2024 law authorizes local governments to adopt the exemption rather than requiring it. (Louisiana Legislature, House Fiscal Division and Senate Revenue and Fiscal Affairs staff: 2024 State Tax Reform and Recent Federal Tax Updates (December 5, 2025))

Louisiana has no inheritance tax: Act 822 of 2008 repealed the inheritance tax law. An estate transfer tax remains in the statutes (R.S. 47:2431 to 2437), but it equals the federal credit for state death taxes, and the Department of Revenue states that no estate transfer tax is due for deaths after December 31, 2004. Louisiana estates face the federal estate tax only. (Louisiana Department of Revenue: Inheritance and Estate Transfer Taxes)

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

On November 3, 2026 voters decided ten constitutional amendments. The Secretary of State’s unofficial returns show Amendment 9, raising the special assessment income limit to $150,000 from 2027, approved with 58.19%, and Amendment 6, the local-option exemption for owners 65 or older from 2028, approved with 63.56%. Amendment 2, on millage adjustments, and Amendment 10, an exemption for rehabilitated blighted property, were rejected. (Louisiana Secretary of State: Unofficial Election Results, November 3, 2026, statewide constitutional amendments)

Estimated tax rules were loosened for 2026. Act 307 of the 2026 session lowers from 90% to 70% the share of current-year tax used to measure whether an individual has paid enough in estimates. The session made no change to the individual rate, the standard deduction or the retirement exemption. (Louisiana Department of Revenue, 2026 Regular Session Legislative Summaries (Act 307, estimated tax))

A credit that began in 2025 is relevant to homeowners facing storm insurance costs: Act 404 of 2025 gives a nonrefundable income tax credit for installing a certified fortified roof on a primary residence with a homestead exemption, up to $10,000 per home, for expenses from July 1, 2025. The program is capped at $10 million a fiscal year, first come, first served. (Louisiana Department of Revenue, 2025 Regular Session Legislative Summaries (Acts 251 and 404))

A Louisiana resident who must file a federal return files Form IT-540 and reports all income, wherever earned, with a credit for income tax paid to another state. The instructions treat a change of domicile as intent shown by action: registering to vote, titling vehicles, obtaining a driver’s license and claiming a homestead exemption in the new state. A temporary absence does not change domicile. (Louisiana Department of Revenue, 2025 Form IT-540 instructions (lines 7-11, Schedule E codes 01E-07E and 20E, Worksheet for Code 06E, residency))

Nonresidents and part-year residents with Louisiana-source income file Form IT-540B, which separates federal income from the portion earned or sourced in Louisiana, including a line for IRA distributions, pensions and annuities. A part-year resident may file as a resident or as a nonresident, whichever produces the lower tax. (Louisiana Department of Revenue, 2025 Form IT-540B instructions (nonresident and part-year resident return))

Federal law protects retirement income in both directions. Under 4 U.S.C. 114 no state may tax the pension, IRA, 401(k) or 403(b) income, or military retired pay, of a person who is not its resident or domiciliary. A retiree who leaves Louisiana stops owing Louisiana tax on those payments. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)

Retirees with taxable income should expect to pay estimates. Louisiana requires estimated payments when tax after withholding and credits is expected to exceed $1,000 for a single filer or $2,000 for joint filers, due April 15, June 15, September 15 and January 15, and it charges a 12% penalty on underpayments. (Louisiana Department of Revenue, Form IT-540ES instructions for 2026: Declaration of Estimated Tax for Individuals)