Franchise Tax

Franchise Tax in Louisiana: Complete Guide 2026

Updated 2026-03-12

Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.

Franchise Tax in Louisiana: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Louisiana imposes a franchise tax on corporations doing business in or organized under the laws of the state. The tax is based on the corporation’s taxable capital, which is essentially the entity’s net worth (capital stock, surplus, undivided profits, and borrowed capital) apportioned to Louisiana. With a graduated rate structure and a relatively low initial threshold, the franchise tax adds a meaningful layer to Louisiana’s overall business tax burden alongside the state’s corporate income tax. Recent legislative reform efforts have proposed phasing out the franchise tax, making it critical for businesses to monitor changes.

Louisiana Franchise Tax Rates (2026)

Taxable CapitalRate
First ~$300,000~$1.50 per ~$1,000
Over ~$300,000~$3.00 per ~$1,000
Minimum tax~$110

The rate structure is straightforward: ~$1.50 per ~$1,000 of taxable capital on the first ~$300,000, then ~$3.00 per ~$1,000 on the excess. This translates to effective rates of approximately ~0.15% on the first ~$300,000 and ~0.30% on capital above that threshold.

How the Louisiana Franchise Tax Works

Who Must Pay

The Louisiana franchise tax applies to:

  • Domestic corporations (organized in Louisiana)
  • Foreign corporations (authorized to do business in Louisiana)
  • Entities taxed as corporations for Louisiana purposes

LLCs, partnerships, and S-corps that are not classified as corporations for Louisiana tax purposes are generally exempt from the franchise tax. Sole proprietorships are also exempt. However, LLCs that elect corporate classification are subject to the tax.

Calculating Taxable Capital

Taxable capital is the entity’s total capital stock, surplus (paid-in and earned), undivided profits, and borrowed capital employed in Louisiana. The calculation starts with the corporation’s balance sheet and includes:

  • Capital stock — par value or stated value of outstanding shares
  • Paid-in surplus — amounts received for stock in excess of par value
  • Retained earnings (undivided profits)
  • Borrowed capital — debt used in the business, subject to specific exclusions

For multistate corporations, taxable capital is apportioned to Louisiana using a ratio based on Louisiana assets to total assets (or Louisiana revenue to total revenue, depending on the apportionment method elected).

Borrowed Capital

Louisiana’s inclusion of borrowed capital in the franchise tax base is one of the more unusual features of its system. Borrowed capital generally includes long-term debt (maturity greater than ~1 year) used in the business. This means that heavily leveraged corporations face franchise tax on their debt as well as their equity. Certain exclusions apply for debt secured by property outside Louisiana and for specific types of financing.

Filing and Payment

RequirementDetail
Filing deadline~15th day of the ~5th month after fiscal year-end (May ~15 for calendar-year filers)
ExtensionAutomatic ~7-month extension available with timely estimated payment
Minimum tax~$110
Filing methodElectronic filing through Louisiana Department of Revenue’s Louisiana File Online (LaTAP)

Franchise Tax Phase-Out Efforts

Louisiana has considered legislation to phase out the corporate franchise tax over several years. Proposals have included reducing rates incrementally or converting the franchise tax into credits against the corporate income tax. As of ~2026, the franchise tax remains in effect, but the legislative landscape is fluid. Businesses should monitor sessions of the Louisiana Legislature for updates that could reduce or eliminate this obligation.

Comparison to Other State Franchise/Capital Taxes

StateTax TypeRateBase
LouisianaFranchise tax~0.15%—~0.30%Taxable capital (net worth + borrowed capital)
TexasFranchise (margin) tax~0.375%—~0.75%Revenue minus deductions
TennesseeFranchise tax~0.25%Greater of net worth or property
MississippiFranchise tax~$2.50 per ~$1,000Capital employed in MS
DelawareFranchise taxVariesAuthorized shares or assumed par value

Louisiana’s inclusion of borrowed capital in the base distinguishes it from most other states, which tax only equity-based measures.

Tips for Minimizing Louisiana Franchise Tax

  1. Minimize borrowed capital employed in Louisiana. Since Louisiana taxes debt as part of taxable capital, structuring financing to exclude Louisiana operations from long-term debt can reduce the franchise tax base.
  2. Optimize the apportionment ratio. Multistate corporations should review the asset apportionment formula and ensure Louisiana assets are accurately reported. Over-reporting Louisiana assets inflates the tax.
  3. Evaluate entity classification. LLCs and partnerships that are not taxed as corporations are generally exempt. If your entity is currently classified as a corporation, evaluate whether reclassification is appropriate.
  4. File on time to avoid penalties. Late filing penalties are approximately ~5% of the tax due per ~30-day period, up to ~25%. Interest also accrues from the original due date.
  5. Monitor phase-out legislation. If the franchise tax is reduced or eliminated, plan to take advantage of the changes as early as possible. Retain documentation of prior-year payments for potential credit or refund claims.
  6. Claim available exemptions. Certain industries and new businesses may qualify for franchise tax exemptions or reduced rates under Louisiana’s economic development programs.

Key Takeaways

  • Louisiana’s franchise tax applies to corporations at rates of ~$1.50 per ~$1,000 on the first ~$300,000 of taxable capital and ~$3.00 per ~$1,000 on the excess
  • Taxable capital includes capital stock, surplus, retained earnings, and borrowed capital (debt), making Louisiana’s base broader than most states
  • The minimum franchise tax is approximately ~$110
  • LLCs, partnerships, and S-corps not taxed as corporations are generally exempt
  • Multistate corporations apportion taxable capital to Louisiana based on the ratio of Louisiana assets to total assets
  • Legislative efforts to phase out the franchise tax are ongoing; businesses should monitor developments

Next Steps