On Monday, June 26, seven new tax laws went into effect in Louisiana after Governer John Bel Edwards signed the pending legislation that had already been approved by state lawmakers. These new laws are part of Governor Edwards attempt to dramatically overhaul the state's tax system. Currently, the state is facing the prospect of a $1.2 billion budget shortfall beginning from next fiscal year on July 1, 2018. Therefore, it is interesting to see how the new tax laws may affect this shortfall as some of the laws could potentially increase this shortfall by millions of dollars.
- Tax Break for Rural Health Practitioners
One of the state's new tax laws was designed to provide a tax break to all nurse practitioners that work in rural areas. Under the state's existing law, all dentists and primary care physicians working in rural areas received a tax break and this break has now been extended to nurse practitioners.
As well, the new law also changes the requirements that health care providers must meet to qualify for the tax break. Under the new law, these providers must practice in an area that the Louisiana Department of Health terms rural and that the federal government has listed as having a shortage of health care. The previous version of the tax credit resulted in the state losing $511,000 in taxes over the previous fiscal year and it is predicted that the new law could cost the state even more.
- Tax Deduction for Telecommunications and Utility Companies The state will now give a deduction in corporate income tax to companies regulated under the Louisiana Public Service Commission. This law is predicted to decrease the state's tax revenue beginning in 2019, but the effect might not be all that major as most experts predict that only one or two entities will actually qualify for the new deduction.
- Sales Tax on Rare Coins Under a current law, a partial sales tax must be paid on some rare coins purchases. This law was set to end on July 1, 2018, after which any rare coin purchases under $1,000 would have qualified for a full exemption for sales tax. However, the new law changes things so that as of October 1, 2017, rare coins purchases under $1,000 will be charged full sales tax. All coin purchases over $1,000 will still be exempt from sales tax. Still, the sales tax on coins under $1,000 should add at least some money to the state's budget.
- Inventory Tax Credit for Rental Equipment Louisiana already has an inventory tax credit for companies that rent out certain types of equipment, and this tax credit is now available to anyone that rents out heavy equipment for forestry, mining and construction. Analysts are predicting that this law could be one of the most significant and has the potential to cost the state millions per year.
- Extension of Angel Investor Tax Credit Louisiana also made changes to its angel-investor tax credit program, which was originally set to end this December. The new law extends the credit so that it is available until 2021. However, it also tweaks the laws so that investors can't claim the credit for as long or receive as large of a credit. Still, the law is predicted to result in total losses of around $14 million from 2020 to 2026.
- Research and Development Tax Credits The state's research and development tax credit was set to end in 2019, but a new law extends the program until 2021. Still, it is predicted that the new law will actually save the state around $2 million between now and 2022 as the law lessens the amount of credit companies can receive.
- No State Tax for Out-of-State Disaster Companies The final law affects any out-of-state individuals and companies responding to a disaster in Louisiana. As of January 1, 2018, these businesses will no longer have to pay income tax on money made during their disaster response efforts. While this law could eventually cost the state, the overall effect will obviously depend on whether the state experiences a major natural disaster in the coming years.