If you haven’t heard the news, on Friday, April 1, 2016, Louisiana State Sales tax increased in many categories, in addition to adding new sales tax categories. This is in an attempt to help stabilize the state’s budget which was out of balance when Louisiana Governor John Bel Edwards took office this year. Let’s take a look at some of the changes that took effect:
Louisiana State Sales Tax Overall Increase
Which major United States city now boasts the highest combined state and local sales tax? New Orleans. Residents and visitors of the Big Easy will now pay an additional one cent per dollar extra on everything they buy in the city. The Louisiana state sales tax has increased from 4% to 5%, making New Orleans’ combined city and state sales tax a whopping 10.25% on everything from automobiles to furniture to clothing and household goods. There is still no state sales tax on food for home consumption, residential utilities and prescription drugs. This sales tax increase supposedly expires in July 2018.
Sales Tax Increases on Alcohol, Tobacco and Car Rentals
Cigarettes, beer, wine, and liquor will all also cost more, but their sales tax increase does not expire. Cigarette taxes increase from 86 cents per pack to $1.08 per pack, which is the second time in a year that cigarette taxes increased. The cost of a case of beer will increase by 18 cents and the cost of a glass of wine or liquor goes up a few cents each.
Short Term Rentals Hit with New Sales Tax
In addition to sales tax increases, state hotel taxes will now apply to rentals on Airbnb and similar services such as VRBO (Vacation Rental By Owner.) In addition to the new state sales tax, New Orleans passed its own regulations on those types of rentals. In January, the City Planning Commission got together to discuss the issue of short term rentals that are not considered legal Bed & Breakfasts. Apparently, they are still in the voting stage, but they were discussing legalizing the short term rental market to some capacity.
Random Sales Tax Changes
This is Louisiana, and we make our own rules. Apparently, there is no longer a sales tax on specialty Mardi Gras beads.
Act 25 of the state tax legislation eliminates a number of other existing state sales taxes, but for certain months, and times of year. What? Yes, it’s even fairly confusing to lawmakers.
New laws keep sales tax breaks for materials used in the production of crawfish and catfish, but not for purchases and supplies used by the commercial fisherman.
Additionally, a sales tax is not in place for membership dues or non-profit groups that offer workout facilities to their members. Think: JCC. This sales tax follows the same two year schedule as some others.
We typically have a couple weekends per year called “State sales tax holidays” where no one has to pay the 4% (now 5%) sales tax. Those are eliminated and instead replaced with a 2% sales tax holiday weekend.
Lastly, because Louisiana will now be collecting sales taxes on some purchases made online through “dealers” in the state, Amazon has pulled their affiliate program, Amazon Associates, from anyone who is operating (mostly blogs and YouTube users) within Louisiana. That’s a big blow to anyone who depends on that commission to operate their business.
The Tax Foundation, a pro-business Washington, D.C.-based think tank whose tax and budget rankings are frequently cited by state legislators, has ranked Louisiana as the worst of the worst in state sales taxes. Meaning, it was the worst…and now it’s worse.
