LDR Finalizes Pass-Through Entity Election And Withholding Table Rules

The Louisiana Department of Revenue has finalized two sets of regulations published in the May 20, 2026 edition of the Louisiana Register that affect Louisiana’s pass-through entity tax election framework and employer state income tax withholding. The adopted rules amend Louisiana Administrative Code Title 61, Part I, at Sections 1001 and 1501, respectively, and reflect regulatory changes that the Department had signaled earlier this year through both a notice of intent and a Revenue Information Bulletin. 

Pass-Through Entity Election: Streamlined Documentation Requirements

The final rules include an amendment to LAC 61:I.1001 governing the election available to S corporations and entities taxed as partnerships under Louisiana Revised Statute 47:287.732.2, which permits qualifying entities to pay Louisiana income tax at the entity level rather than passing the tax obligation through to individual owners. Under the prior regulation, each shareholder, partner, or member of an electing entity was required to submit Form R-6981, Statement of Owner’s Share of Entity Level Tax Items, together with a pro forma federal income tax return with their Louisiana individual or fiduciary income tax filing. The final rule amends that requirement so that the pro forma federal return and nonresident worksheet are no longer required to be filed with the Louisiana return. Instead, they will be required only upon specific request by the Department. Owners of electing entities must still submit Form R-6981, and all other requirements for making and maintaining the election remain unchanged. This includes the majority ownership approval requirement, electronic filing of the entity’s Form CIFT-620, and attachment of Schedule K-1s and Form R-6982 to the entity’s return. The amendment applies beginning with the 2025 taxable year and formalizes the administrative relief that the Department had previously announced in Revenue Information Bulletin 26-007.

Updated Income Tax Withholding Tables

The second adopted rule finalizes updated Louisiana income tax withholding tables under LAC 61:I.1501, which govern the amounts Louisiana employers are required to withhold from employee wages and remit to the Department. The withholding tables are updated to reflect the annual inflation adjustment to the Louisiana standard deduction as required by Louisiana Revised Statute 47:294(B), which requires that the standard deduction be adjusted for inflation each year. The revised tables are effective for withholding periods on or after January 1, 2026, and apply across all standard deduction categories and pay frequencies. Employers who have not yet updated their payroll systems to reflect the 2026 withholding tables should do so promptly to ensure that employee withholding is correctly calculated for the remainder of the calendar year.

Notice of Intent: Repeal of Obsolete Sales and Use Tax Exemptions, Exclusions, Refunds, and Holidays

Also published in the May 20, 2026 Louisiana Register is a notice of intent by the Department to repeal eight regulatory provisions concerning sales and use tax exemptions, exclusions, refunds, and holidays which were repealed from Louisiana statutory law effective December 4, 2024, or have otherwise expired. The regulations proposed for repeal are the exclusion from the definition of retail sale for pollution control devices and systems; the sales tax refund available for tangible personal property destroyed in a natural disaster; and six provisions in Chapter 44 covering exemptions for little theater tickets, tickets to musical performances of nonprofit musical organizations, admissions to entertainment furnished by certain domestic nonprofit corporations, purchases of Mardi Gras specialty items, the annual state sales tax holiday on hurricane-preparedness items held on the last Saturday and Sunday of each May, and the sales and use tax exemption for charitable construction of animal shelters. Interested parties may submit written comments to the Tax Policy and Planning Division at the Department’s Baton Rouge office, no later than 4 p.m. on June 30, 2026, and a public hearing is scheduled for July 1, 2026.

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