Overview of Louisiana Taxes
Louisiana has three state income tax brackets that range from 1.85% to 4.25%. Though sales taxes in Louisiana are high, the state’s income tax rates are close to the national average. No Louisiana cities charge local income taxes on top of the state rates.
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Louisiana Paycheck Calculator
Louisiana Paycheck Quick Facts
- Louisiana income tax rate: 1.85% - 4.25%
- Median household income: $57,852 (U.S. Census Bureau)
- Number of cities that have local income taxes: 0
How Your Louisiana Paycheck Works
No matter which state you call home, your employer withholds money for FICA taxes, which include Social Security and Medicare taxes. Every pay period, your employer withholds 6.2% of your earnings for Social Security taxes and 1.45% of your earnings for Medicare taxes. Your employer then matches that contribution. If your filing status is single, head of household of qualifying widow(er), your earnings in excess of $200,000 are subject to a 0.9% Medicare surtax, not matched by your employer. This threshold is $250,000 if you're married and file jointly or $125,000 if you're married and file separately.
Next up is federal income tax withholding. The only way you can get around this is if your income is very low. Exactly how much your employer withholds to cover your federal income tax liability depends on several factors, including marital status, number of dependents and taxable income. When you start a new job or need to change your withholding, you have to provide your employer a new W-4 form.
In recent years, the Form W-4 has seen an overhaul. More specifically, the new withholding form doesn’t ask you to list total allowances. Instead, it features a five-step process that allows filers to enter personal information, claim dependents and indicate any additional income or jobs. It also requires filers to specify annual dollar amounts for income tax credits, non-wage income, itemized and other deductions and total annual taxable wages. These changes mainly apply to those adjusting their withholdings or changing jobs.
Besides FICA taxes and federal and state income taxes, you can also elect to have additional money withheld from your paychecks. Do you contribute toward the cost of health insurance, life insurance or disability insurance premiums through company-sponsored plans? If so, those contributions come out of your paycheck. Do you contribute to a 401(k), a health savings account (HSA) or a flexible spending account (FSA)? That too will also come out of your paycheck.
So what makes a Louisiana paycheck different from a paycheck in another state? Like most U.S. states, Louisiana has a state income tax. And unlike some of the other income tax states, Louisiana’s top tax bracket starts at a relatively low income. In Louisiana, the top rate of 4.25% applies to income over $50,000 for single filers and income over $100,000 for joint filers. Compare that to New Jersey, where the top rate doesn’t kick in until your income hits $1 million. Also unlike some other states, Louisiana does not allow cities to impose their own income tax on top of the state income tax.
If you earn money in Louisiana your earnings will be subject to state income taxes, even if you live in another state. That goes for wage income and other forms of income, like investments and rent from a property you own. Likewise, if you’re a Louisiana resident and you earn money in another state, that income is taxable by Louisiana. However, you can claim a tax credit on your Louisiana income tax return for the taxes paid to another state where you earned income. Special rules apply to members of the armed services who were stationed outside the state on active duty.
If you estimate that your Louisiana state tax liability (after credits and other income taxes are withheld) will exceed $1,000 for single filers or $2,000 for joint filers, you must make what’s called a declaration of estimated income tax and make estimated tax payments. You can pay your estimated taxes in full with your declaration, or in equal quarterly installments, on or before April 15, June 15, Sep. 15 and Jan. 15. If you fail to pay or you underpay your estimated income tax, the penalty is 12% annually of the underpayment amount for the period of underpayment.
A financial advisor can help you understand how taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
How You Can Affect Your Louisiana Paycheck
If you want to shelter more of your earnings from taxes, you can always contribute to tax-advantaged accounts. You can put pre-tax dollars in a 401(k) and let that money grow tax-free until you start taking distributions in retirement. You can also put pre-tax dollars in a flexible spending account (FSA) or health savings account (HSA) account to use for medical expenses. Some workplaces offer other benefits you can pay for with pre-tax dollars, such as commuter cards that let you pay for parking or public transit.
If on the other hand your focus is on having more take-home pay in your paycheck, you can ask for a raise or seek supplemental wages. This includes overtime, but also bonus pay, award money and commissions. These supplemental wages (as well as vacation pay) are subject to Louisiana income taxes at the regular rate.
With average income tax rates and low property taxes, Louisiana may be on your list of potential places to call home. If you’re looking to become a resident, take a glance at our Louisiana mortgage guide to understanding mortgages in the Pelican State.
