StructuredSales.org
StructuredSales.org
For years, a Louisiana seller of a closely held business could point to a state deduction that grew with how long the company had been commercially domiciled in the state, up to a full exclusion. That deduction is not available for a sale executed on or after January 1, 2025. What replaced the old brackets is a flat 3% individual income tax. On a 2026 closing, Louisiana's share of a capital gain is 3% of the taxable amount. The federal brackets, and the 3.8% net investment income tax, are where spreading the gain still changes the bill.
The people who need the update are fabrication and marine-service owners, sugarcane and rice families, timber owners, and mineral sellers who were told Louisiana does not tax the gain on a company. Some of that advice described the old statute. This page describes the rule for a sale now, and the grandfather for a sale that already closed.
Act 11 of the 2024 Third Extraordinary Session, and Revenue Information Bulletin 25-012, repealed the graduated individual brackets for taxable periods beginning on or after January 1, 2025. The rate is 3% of taxable income for every filing status. The Department's FAQ says the same for 2025 and later years. There is no long-term capital-gains preference under that rate.
Act 11 also raised the standard deduction, before indexing, to $12,500 for single and married-filing-separately filers and to $25,000 for a joint return, surviving spouse, or head of household. The first CPI adjustment was set for January 1, 2026. This page does not quote an indexed dollar amount. On a large sale the deduction is already used, and the marginal rate on the gain is 3%. The act also raised the 65-or-older retirement exemption from $6,000 to $12,000 per person before indexing. That exemption is not a gain exclusion. Parishes do not add an income tax.
The repealed provision was R.S. 47:293(9)(a)(xvii). Revenue Information Bulletin 16-039, written while the deduction existed, described a two-part test. The taxpayer had to hold the equity or the assets of a nonpublicly traded business for at least five years. The business had to be commercially domiciled in Louisiana, and the percentage stepped up with that domicile: 50% after five years, then 60, 70, 80, 90, and 100% at 30 years. A predecessor's holding period did not carry over. Publicly traded stock was outside the deduction.
Act 11 repealed that paragraph for periods beginning on or after January 1, 2025. The Department's FAQ is the sentence sellers need: a sale executed before January 1, 2025 can still support the deduction, including installment payments recognized after that date. A sale executed in 2026 cannot. Telling a Houma or Lafayette owner that Louisiana excludes the gain describes a closed window, unless the documents were signed before 2025 and the holding-period and domicile tests were met.
If you are already collecting on a pre-2025 installment sale that qualified, do not casually refinance or dispose of the obligation. A disposition can accelerate the remaining federal gain, and it can raise the question of whether Louisiana still sees the original sale. Ask the CPA who claimed the deduction before the note is touched.
Louisiana starts from federal AGI. With the deduction repealed for new sales, §453 gain a resident recognizes is generally taxed at 3% in that same year. Spreading payments spreads the 3%. It does not cut the total. A nonresident stays taxable on Louisiana real property and on a business carried on in the state as payments arrive, including after a move. Stock-sale sourcing depends on the interest sold. The federal tax-treatment page explains Form 6252. It does not prepare the IT-540.
Federal limits still travel with the seller. Section 453(i) taxes depreciation recapture in the year of sale. Section 1245 is the usual provision for equipment. Unrecaptured section 1250 gain on buildings is taxed federally at up to 25%. Section 453A charges interest on deferred tax when installment obligations from the year, still outstanding at year-end, exceed $5 million. Related-party rules in §453(e) and §453(g) matter when the buyer is a child or a family entity. Act 11 did not repeal any of those rules.
Marine fabrication, boat repair, oilfield service, and river machine shops are asset-heavy. After 2024, neither a stock sale nor an asset sale revives the repealed deduction. Stock can be one capital asset. An asset sale splits into inventory, equipment recapture, buildings, land, and goodwill. Only the capital and section 1231 pieces are installment candidates. The business-sale overview and the page on turning a sale into retirement income cover that split.
Sugarcane, rice, cattle on cut-over timberland, and crawfish ponds are mostly land gain when the family has held the ground for decades. The farmland and inherited-farmland guides cover basis and allocation. There is no Iowa-style retired-farmer exclusion. A 1031 exchange still fits if replacement property is the goal. Mineral royalties are ordinary. Selling the minerals can be capital gain, subject to §1254, which the mineral-rights article covers. Timber has its own §631 elections. New Orleans and Baton Rouge rentals more often carry recapture. See the real-estate installment page. A move should be modeled with Louisiana sourcing. Mississippi and Arkansas have their own guides. Texas does not.
A married couple sells the land and the self-created goodwill of a marine fabrication company in Terrebonne Parish. The buyer pays $2,000,000 for those two assets. Basis is $400,000. Long-term gain eligible for the federal 0/15/20% rates is $1,600,000. Equipment is sold for approximately its tax basis, so this table leaves recapture out. The building's depreciation, if any, is also left out; unrecaptured section 1250 gain would be taxed at up to 25% federally and is not in these figures. The sale is executed in 2026, so the repealed Louisiana deduction does not apply. One spouse continues a $95,000 hospital salary. They file jointly and use the $32,200 federal standard deduction for 2026. Their other income uses the Louisiana standard deduction, so the marginal state rate on the gain is 3%.
Principal is paid over eight years. The gross-profit percentage is 80%, so each year they recognize $200,000 of gain. Brackets are Revenue Procedure 2025-32. NIIT is 3.8% above $250,000 of joint MAGI. The table ignores interest, which would be ordinary income taxed federally as received and included in Louisiana income at 3%, plus the time value of money and any deduction for state tax. Figures are rounded estimates.
| Estimate | Lump sum | Eight-year total |
|---|---|---|
| Long-term gain recognized | $1,600,000 | $1,600,000 |
| Federal tax at 0% / 15% / 20% | $287,040 | $196,680 |
| Federal NIIT at 3.8% | $54,910 | $13,680 |
| Louisiana tax at 3% | $48,000 | $48,000 |
| Estimated total on the gain | $389,950 | $258,360 |
The illustrative difference is about $131,590, all federal. The lump-sum year taxes $1,049,100 at 20% and applies the NIIT to $1,445,000. Each $200,000 of gain sits on $62,800 of ordinary taxable income, so about $36,100 is at 0% and the rest at 15%. Louisiana's $48,000 does not change, about $6,000 a year. Thirty years of domicile under the old deduction might have removed that $48,000. A 2026 sale does not. This obligation is under $5 million. A larger one should run the §453A calculator. The site calculator does not know whether the sale closed before 2025.
For taxable periods beginning on or after January 1, 2025, the individual income tax is a flat 3% of taxable income. The old graduated brackets are repealed. There is no separate, lower rate for long-term capital gains.
Not if the sale is executed on or after January 1, 2025. Act 11 of the 2024 Third Extraordinary Session repealed the net capital gains deduction in R.S. 47:293(9)(a)(xvii). The Department of Revenue says a sale executed before that date can still support the deduction, including installment payments recognized after January 1, 2025.
Louisiana individual income tax starts from federal adjusted gross income. Gain a resident reports under IRC §453 is generally in the Louisiana base in the year it is recognized federally. A nonresident remains taxable on Louisiana-source gain, including gain from Louisiana real property and from a business carried on in Louisiana, as payments arrive. Confirm the sourcing on your facts with a Louisiana preparer.
The flat 3% tax on a given amount of taxable gain adds up to the same dollars in one year or eight. Spreading changes when Louisiana is paid. The change in the amount of tax, in the illustration on this page, is federal: long-term brackets and the 3.8% net investment income tax. That illustration is an estimate, not a guarantee.
The Department of Revenue's answer is no, if the sale was executed before January 1, 2025. Installments recognized after that date may still be claimed. Do not restructure a grandfathered note without asking whether the change is treated as a new sale. The deduction had holding-period and Louisiana-domicile conditions, and it was never available for publicly traded stock.
Last reviewed: October 22, 2026.
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