Louisiana may have reached trigger for a personal income tax cut in 2026

Louisiana Revenue Secretary Richard Nelson is pitching a lower income tax rate for most Louisiana’s residents. (Photo by Henrietta Wildsmith)

Louisiana might have met revenue and tax collection thresholds that would trigger an across-the-board personal income tax cut at the beginning of 2026, but would worsen the state’s budget crisis over the next few years.

Gov. Jeff Landry’s administration said Wednesday the projected state budget deficit for next fiscal year could grow another $100 million to $200 million if income tax rates automatically lower as a 2021 state law requires.

The income tax rate reductions, if mandated, would bring the state’s estimated financial shortfall from $587 million next year to as much as $787 million, according to the state revenue department. This larger deficit would make budget cuts to higher education, disability services and public school teacher pay more likely.

State budget holes would also deepen for years to come. Starting July 1, 2026, the impact of the income tax reduction would be a loss of $200 million to $400 million in state revenue per year. It would bring the projected budget shortfall for fiscal year 2027-28 to more than $1 billion.

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