How Much Is Capital Gains Tax in Louisiana: 3% Plus Federal

Capital gains tax in Louisiana is charged at a flat 3 percent, the same rate the state applies to wages and every other kind of individual income. That 3 percent sits on top of whatever federal capital gains tax you owe, so your total bill depends on both layers. Louisiana does not offer a lower rate for long-term investments, and a deduction that once sheltered gains from selling certain Louisiana businesses was repealed effective January 1, 2025.¹

The Louisiana Rate and How the Gain Is Calculated

Under La. R.S. 47:32, every dollar of Louisiana taxable income is taxed at 3 percent, capital gains included.² The state doesn’t split short-term and long-term gains; both get the same 3 percent. The distinction still matters federally, but not for your Louisiana return.

Louisiana starts from the federal adjusted gross income on your Form 1040. Your gains are already in that number because you report them on federal Schedule D, which flows into the 1040.³ From there, Louisiana makes a short list of adjustments on Schedule E. The common ones involve interest: U.S. government obligation interest is subtracted because Louisiana doesn’t tax it,⁴ and interest from other states’ bonds is added back because Louisiana taxes it even though the federal return excludes it.⁵

The standard deduction then reduces taxable income before the 3 percent hits. For 2025 the standard deduction is $12,500 for single and married-filing-separately filers and $25,000 for married filing jointly, qualifying surviving spouse, and head-of-household filers.⁶ Louisiana adjusts these amounts for inflation; the 2026 withholding tables use $12,875 for single filers and $25,750 for joint filers.⁷

Federal Capital Gains Tax Stacks on Top

Federally, an asset held longer than one year gets preferential long-term rates. An asset held one year or less is taxed as ordinary income. The 2026 long-term brackets from IRS Revenue Procedure 2025-32 are:⁸

0 percent on taxable income up to $49,450 single or $98,900 married filing jointly.
15 percent above that up to $545,500 single or $613,700 married filing jointly.
20 percent above $545,500 single or $613,700 married filing jointly.

Higher earners also face the 3.8 percent Net Investment Income Tax if modified AGI passes $200,000 single or $250,000 married filing jointly.⁹ Combined with Louisiana’s 3 percent, a high-income resident can pay up to 26.8 percent on a long-term gain: 20 percent federal, 3.8 percent NIIT, 3 percent state.

Selling Your Home

Many home sales produce no capital gains tax at all. Under 26 U.S.C. § 121, you can exclude up to $250,000 of gain from the sale of your principal residence, or $500,000 if married filing jointly, provided you owned and lived in the home for at least two of the five years before the sale.¹⁰ You also cannot have claimed the exclusion on another home sale in the prior two years.¹¹

Because the exclusion removes the gain from federal AGI before Louisiana picks that number up, it also flows through to your state return. Gain within the exclusion limit produces no Louisiana tax either.

Inherited Property

When you inherit an asset, your cost basis is usually reset to the fair market value on the date the previous owner died, not what they originally paid. That stepped-up basis can shrink or wipe out a gain when you sell.¹² If a parent bought a home for $100,000 and it was worth $350,000 at death, your basis is $350,000; selling for $360,000 produces a $10,000 gain, not $260,000. Louisiana uses the same figure because it starts from federal AGI.

Offsetting Gains With Losses

Capital losses reduce capital gains dollar for dollar. If losses exceed gains in a year, federal law lets you deduct up to $3,000 of net loss against other income, or $1,500 if married filing separately, and carry the rest forward.¹³ That treatment is baked into your federal AGI, so it carries into Louisiana. Louisiana’s own statute limits capital loss deductions to the extent of capital gains,¹⁴ but because the state calculation begins from a federal number that already reflects federal loss rules, the practical result generally tracks the federal outcome.

The Repealed Louisiana Business-Sale Deduction

If you’re researching an older article or advice, be careful with references to Louisiana’s net capital gains deduction. Before 2025, La. R.S. 47:293(9)(a)(xvii) allowed a deduction that could eliminate state tax on gains from selling an ownership interest in, or substantially all the assets of, a privately held business commercially domiciled in Louisiana.¹⁵ It was repealed for sales occurring on or after January 1, 2025.

A narrow transition rule can still apply: if the purchase agreement was fully executed and all contractual conditions to complete the sale were satisfied before January 1, 2025, the deduction may still be available even if the closing came later.¹⁶ Qualifying sellers report it on Schedule E of Form IT-540 using exemption code 20E.⁶

Filing and Deadline

Louisiana residents report capital gains on Form IT-540. Federal AGI carries over from Form 1040, and state-specific adjustments happen on Schedule E of the state return.⁶

The Louisiana filing deadline is May 15, about a month after the federal April 15 date. The state grants an automatic filing extension, but it only extends the time to file, not the time to pay. Any balance not paid by May 15 accrues penalties and interest.¹⁷ If you expect to owe, submit an extension payment by that date.¹⁸

1
Louisiana Department of Revenue. Revenue Information Bulletin No. 25-012 – Louisiana Individual Income Tax Reform
2
Louisiana State Legislature. Louisiana Code RS 47:32 – Rates of Tax
3
Internal Revenue Service. About Schedule D (Form 1040), Capital Gains and Losses
4
Louisiana Department of Revenue. Are Interest and Dividends From U.S. Government Obligations Exempt From Louisiana Income Tax?
5
Louisiana Department of Revenue. Is Interest From State or Local Government Obligations Exempt From Louisiana Income Tax?
6
Louisiana Department of Revenue. Instructions for Preparing Your 2025 Louisiana Resident Income Tax Return
7
Louisiana Department of Revenue. R-1306 Louisiana Withholding Tables and Formulas
8
Internal Revenue Service. Revenue Procedure 2025-32
9
Internal Revenue Service. Topic No. 559, Net Investment Income Tax
10
Office of the Law Revision Counsel. 26 U.S. Code 121 – Exclusion of Gain From Sale of Principal Residence
11
Internal Revenue Service. Topic No. 701, Sale of Your Home
12
Internal Revenue Service. Gifts and Inheritances
13
Internal Revenue Service. 2025 Instructions for Schedule D (Form 1040)
14
Justia Law. Louisiana Revised Statutes 47:72 – Limitations on Deductions for Capital Losses
15
Justia Law. Louisiana Revised Statutes 47:293.2 – Regulation Requirement for Capital Gains Deduction
16
Louisiana Department of Revenue. Can I Claim the Net Capital Gains Deduction for Sales Occurring on or After January 1, 2025?
17
Louisiana Department of Revenue. Louisiana State Income Tax Deadline Is May 15
18
Louisiana Department of Revenue. Income Tax Extension Payments