TAX REFORM AND FISCAL POLICY In addition to legal reform, the session also saw significant movement on tax policy — especially around Louisiana’s burdensome and uncompetitive inventory tax. While long-term repeal remains a work in progress, the following measures represent important steps forward: HB 365 and HB 366 HB 365 and HB 366 by Representative Daryl Deshotel, together, lay the groundwork for eventual inventory tax relief. HB 366 proposes a constitutional amendment on the April 2026 ballot to allow parishes to exempt business inventory from property taxes, addressing one of the primary complaints about the defeated March 2024 amendment — that it was too complex. HB 365 provides the enabling legislation for parishes that choose to opt in, including a choice between a one-time lump sum payment from the state or a phased payout. For example, Lafayette Parish would receive $15 million in exchange for opting out of collecting inventory taxes. HB 383 HB 383 by Representative Ken Brass sought to extend the inventory tax credit for C corporations during the transitional period to see if voters approve of the previously mentioned constitutional amendment, and when parishes decide whether to opt out of collecting. The bill originally proposed a 10-year extension, which was reduced to five, then two, before ultimately failing in the Senate. While that outcome was disappointing, the intent remains clear: to provide certainty and continuity for C corporations as the new system takes shape. Pass-Through Entity Protection Importantly, LADA already secured pass-through entity protection for S corporations, LLCs and partnerships during the November 2024 special tax session, ensuring those businesses continue receiving the inventory tax credit — despite some misleading news reporting to the contrary. The decision not to extend the inventory tax credit to C corporations was based on the fact that these businesses benefited from the repeal of the corporate franchise tax during the November 2024 special session, whether we agree or not. SB 65 SB 65 by Senator Franklin Foil changes the inventory tax credit. For C corporations, the credit is limited to ad valorem taxes paid on inventory prior to July 1, 2026, though the carry-forward period is extended from five to ten years. For entities taxed as S corporations for federal income tax purposes, effective July 1, 2026, the credit may only be earned on amounts that flow through to shareholders and must be allocated in proportion to ownership interests, pursuant to R.S. 47:287.732(B). These limitations do not apply to entities taxed as partnerships or disregarded entities for federal purposes (e.g., LLCs not electing S corporation status), which may continue to allocate the credit to owners as provided under existing law. SB 44 SB 44 by Senator Jay Luneau, which would have replaced the refundable Inventory Tax Credit with a nonrefundable 10-year carryforward-only system, was soundly defeated. This was a major win for dealer liquidity and ensures dealers can continue to reinvest in operations, facilities and workforce. HB 578 HB 578 by Representative Julie Emerson reinstates the sales tax exemption for rental vehicles provided under warranty agreements, retroactive to Jan. 1, 2025. This avoids double taxation on a single transaction and allows eligible dealers to seek refunds. SB 112 SB 112 by Senator Katrina Jackson-Andrews restores local vendors’ compensation to dealers processing registrations through the state system. This ensures proper reimbursement for the administrative burden of collecting and remitting local taxes, pursuant to local ordinances. 10
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