Louisiana has no separate capital gains rate. A gain from stocks, a business or real estate is part of your federal adjusted gross income, and since 2025 Louisiana taxes taxable income at one flat rate. The other change that matters to sellers is that the Louisiana deduction for gains on the sale of a Louisiana-based business, which used to wipe out much of the state tax on a business sale, no longer applies to sales on or after 1 January 2025.
This guide uses the Louisiana Department of Revenue's income tax reform FAQs, its 2025 resident (IT-540) and nonresident (IT-540B) instructions its Revenue Information Bulletin 26-019 and two IRS pages, all read on 3 November 2026. We did not read the Louisiana statutes themselves, so each rule below is stated as the Department states it.
The Department's rate FAQ says that for taxable periods beginning on or after January 1, 2025, the individual income tax rate is a flat 3%, and that the old graduated brackets (1.85%, 3.5% and 4.25% for 2022 to 2024) are replaced. The 2025 resident instructions say Act 11 of the 2024 Third Extraordinary Legislative Session changed the income tax rate to a flat tax rate of 3%.
The Department also says the standard deduction is increased to $12,500 for single filers and married filing separately from 2025, with $25,000 for married filing jointly, qualifying surviving spouse and head of household, and that it will be adjusted annually for inflation (the CPI for all urban consumers).
For tax year 2026 the Department's Revenue Information Bulletin No. 26-019 (28 September 2026) applies a 2.7% CPI-U adjustment and gives $12,838 for a single individual or married filing separately, and $25,676 for married filing jointly, head of household or qualifying surviving spouse. We did not find an enacted change to the 3% rate for 2026 or 2027: bills to cut or repeal the income tax (for example HB 253 and HB 898 in the 2026 regular session) were still listed as pending in House Ways and Means on the legislature's site when we checked on 3 November 2026. The worked example below uses the 2025 tax year because the 2025 return instructions are the latest published return lines.
The 2025 IT-540 instructions tell residents to enter federal adjusted gross income, taken from Form 1040 or 1040-SR, Line 11b, on Line 7, and then adjust it on Schedule E for exempt income or deductions. A capital gain reported on your federal return is therefore already in your starting figure, and Louisiana taxes it with your other income at the flat rate. We found nothing in the Louisiana pages that taxes short-term and long-term gains differently, and no lower rate for long-term gains.
For the federal side, IRS Topic 409 says that generally an asset held more than one year gives a long-term gain or loss, so that is the usual dividing line even though Louisiana does not use it to set a different rate.
Louisiana used to allow a deduction for net capital gains from the sale or exchange of an equity interest, or of substantially all the assets, of a nonpublicly traded business commercially domiciled in Louisiana. The 2025 instructions (code 20E) say the taxpayer had to have held the business for a minimum of five years immediately before the sale, and that the deduction is now limited to installment and perfected sales before January 1, 2025.
The Department's FAQ answers the practical questions directly. For taxable periods beginning on or after January 1, 2025, the net capital gains deduction has been repealed. But if a purchase agreement was executed by all parties and all conditions contractually required to perfect the sale were satisfied before January 1, 2025, the deduction is allowed even if closing is after that date. Sales executed before January 1, 2025 remain eligible, and installments recognized after that date may still be claimed provided the sale was executed before it.
For a seller whose sale was not perfected before 2025, we read the result as no Louisiana deduction: the whole gain is in federal adjusted gross income and is taxed at 3%. If you are close to the cutoff, the Department's Form R-6180 (Net Capital Gains Deduction Worksheet) and a preparer are the place to check the facts of your own sale.
This table is our arithmetic (gain times 3%), not an official calculation. It shows the Louisiana tax a gain adds when it sits on top of your other taxable income, ignoring credits, exemptions and adjustments, rounded to the nearest dollar.
| Capital gain included in federal AGI | Added Louisiana tax at 3% |
|---|---|
| $10,000 | $300 |
| $50,000 | $1,500 |
| $100,000 | $3,000 |
| $500,000 | $15,000 |
Worked example (ours, 2025 tax year): a single resident has $60,000 of wages and a $50,000 long-term gain, takes the $12,500 standard deduction and has no adjustments or credits. Federal adjusted gross income is $110,000 and Louisiana taxable income is $97,500, so tax at 3% is $2,925. Without the gain, taxable income would be $47,500 and tax $1,425. The gain adds $1,500. With the 2026 standard deduction of $12,838 the same example gives taxable income of $97,162 and tax of about $2,915; the gain still adds $1,500, because the deduction is the same with or without it. Real returns can differ because of itemized deductions, credits and other items on Form IT-540.
Because Louisiana starts from federal adjusted gross income, the federal loss rules carry through. IRS Topic 409 says the excess of capital losses over gains that you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss, and that losses from the sale of personal-use property such as your home or car are not tax deductible. The Louisiana pages we read do not add a separate loss rule, so we do not state one. If you have a loss carryover, the federal return is where it is tracked.
Residents report federal adjusted gross income on Form IT-540. The 2025 instructions say nonresidents must use Form IT-540B and that part-year residents have the option to file a resident or nonresident return, whichever is more beneficial.
The nonresident instructions say a nonresident, or part-year resident with income from Louisiana sources, who is required to file a federal return must file a Louisiana return. Their worksheet identifies the portion of federal adjusted gross income that is Louisiana-sourced income, and for capital gains you enter the federal amount and then the amount of gains or losses sourced in Louisiana. That Louisiana-sourced income is Line 8 of the return. Line 9 divides Line 8 by Line 7 (federal adjusted gross income) to give a percentage that cannot exceed 100 percent; the instructions cite R.S. 47:293(10) for a ratio of 100 percent when federal adjusted gross income is less than Louisiana income. As we read the 2025 instructions, that percentage is used to prorate itemized deductions (Line 11E), while the standard deduction on Line 10 is entered in full. Line 12 is Line 8 less those deductions, and Line 13 multiplies Line 12 by .03. As a simple illustration (ours): with federal adjusted gross income of $100,000 and $40,000 of Louisiana-sourced income, the ratio is 40.00 percent, so an itemizer could deduct 40% of the allowable itemized amount.
The pages we read do not set out which gains count as Louisiana-sourced (for example stock sold by a nonresident), so we do not state that rule; the Department's sourcing rules and a preparer decide it.
We found no separate Louisiana home sale rule in the Department's pages. IRS Topic 701 says you may qualify to exclude up to $250,000 of the gain on the sale of your main home from your income, or up to $500,000 if you file a joint return with your spouse. Because Louisiana starts from federal adjusted gross income, we read the effect as leaving only the gain above that exclusion for Louisiana to tax at 3%; the Department's pages we read do not say this in so many words. For the federal test, see our home sale capital gains guide.