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Today marks the start of Louisiana’s third special session of 2024, where Governor Jeff Landry aims to address tax reform. The proposed changes include restructuring income tax, broadening sales tax, and repealing the corporate franchise tax, all of which could have significant impacts on restaurant owners and Louisiana Restaurant Association (LRA) members.

The Louisiana Restaurant Association’s (LRA) Advocacy Team is actively evaluating the proposed legislation to ensure the best possible outcomes for LRA members and the broader business community. Here are the key components of the proposed tax plan.

1. Income Tax Reform: The governor proposes simplifying the individual income tax by lowering rates, which could mean modest tax relief for small business owners and employees. This change would allow restaurant owners to retain more of their earnings, potentially supporting business reinvestment.
2. Sales Tax Expansion: The proposal seeks to broaden Louisiana’s sales tax base by including more services, digital products, and business utilities. For restaurants, this could mean higher costs for digital tools, advertising, and outsourced services, impacting overall profitability. Additionally, digital sales, such as gift cards or online ordering platforms, might now incur sales tax, potentially affecting pricing strategies.
3. Corporate Tax Reform: Corporate income tax reforms include a reduction to a flat 3.5% rate. This would simplify tax obligations for restaurant groups operating under corporate structures, reducing tax burdens and offering a streamlined filing process.
4. Ad Valorem and Franchise Tax Changes: The repeal of the corporate franchise tax could relieve some fixed costs for larger, multi-unit restaurant businesses, making Louisiana more competitive for corporate growth. Ad valorem tax adjustments would also bring relief for property owners, though local impacts may vary.

For LRA members, these reforms offer a mix of potential cost reductions and added expenses, especially around new sales tax requirements on services essential to restaurant operations. However, simplified income tax processes and potential franchise tax eliminations could foster a more favorable business climate in Louisiana.