Louisiana Franchise Tax Repealed: 2025 Final Return and Penalties

Louisiana’s corporation franchise tax has been repealed for taxable periods beginning on or after January 1, 2026. If your corporation was subject to the tax during 2025, you still owe one final franchise tax return, generally due May 15, 2026, for calendar-year filers. After that, the tax is gone.¹

When the Repeal Takes Effect

Act 6 of the 2024 Third Extraordinary Session (House Bill 3) repealed Louisiana Revised Statute 47:601, the statute that imposed the corporation franchise tax. The repeal applies to taxable periods beginning on or after January 1, 2026, which makes the 2025 period the last one any corporation will face.¹ The legislature estimated the repeal would reduce state revenue by roughly $574 million a year.²

A corporation formed in Louisiana on or after January 1, 2026, will never owe a franchise tax return. A corporation formed during 2025 owed an initial franchise tax of $110, regardless of capital size, due on or before the 15th day of the fourth month after the month the tax accrued.³

The Final 2025 Franchise Tax Return

Every corporation that had a franchise tax obligation during the 2025 period must file a final return. The 2025 franchise tax is reported on Form CIFT-620, alongside the corporation income tax. For 2026 and beyond, the franchise tax schedules have been removed from the return entirely.⁴

Deadlines follow the same rules that applied in prior years:

Calendar-year corporations: on or before May 15, 2026.⁴
Fiscal-year corporations: on or before the 15th day of the fifth month following the close of the taxable year.⁵

If the due date falls on a weekend or holiday, the return is due the next business day. The franchise tax liability is calculated using the balance sheet from the end of the preceding calendar or fiscal year.⁶

Who Still Has To File

Through the 2025 period, the tax applied to every domestic corporation organized under Louisiana law and every foreign corporation qualified to do business, actually doing business, or owning or using property in Louisiana. LLCs that elected to be taxed as C corporations for federal purposes were included, with an exception for LLCs eligible to elect S corporation treatment on the first day of the franchise tax period.⁷

Insurance companies were taxed under a separate framework and did not owe franchise tax. Public utility corporations regulated by the Louisiana Public Service Commission were also generally exempt. Nonprofit status alone did not create an exemption: a nonprofit had to qualify under specific provisions of the tax code to be excluded.⁸

Extensions on the Final Return

Corporations that cannot file by the due date can obtain a six-month extension by timely requesting a federal income tax extension. No separate Louisiana extension form is required; the corporation checks a box on Form CIFT-620 indicating it requested a federal extension. For calendar-year filers, the extended deadline is November 16, 2026.⁴

Franchise-tax-only filers, such as qualified subchapter S subsidiaries or LLCs treated as disregarded entities for income tax purposes, were not eligible for filing extensions under Louisiana Revised Statute 47:612. Those entities have to file by the original due date.⁹

The extension only extends the filing deadline, not the payment deadline. Any tax owed is still due by the original due date to avoid interest charges.

How the 2025 Tax Is Calculated

For the final 2025 franchise tax period, the rate structure in effect since 2023 still applies:⁵

First $300,000 of taxable capital: no tax.
Taxable capital above $300,000: $2.75 per $1,000, or major fraction thereof.

Taxable capital includes capital stock, surplus, undivided profits, and borrowed capital, with adjustments to reflect the entity’s financial presence in Louisiana. For corporations operating both inside and outside the state, taxable capital is apportioned based on factors like property, payroll, and sales within Louisiana.

Corporations filing a short-period return for part of 2025 (for example, because of a change in accounting period) prorate the tax. The calculation involves computing the full-year tax and multiplying it by a fraction: the number of months in the short period divided by twelve.⁶

Late Filing Penalties on the Final Return

The tax may be ending, but the Department of Revenue can still assess penalties and interest on a late or unpaid 2025 return. The penalty for late filing is 5 percent of the tax due for each 30 days (or fraction thereof) the return is overdue, capped at 25 percent. Interest accrues on any unpaid balance from the due date until payment.¹⁰

A waiver of delinquency penalties can be requested electronically under Louisiana Revised Statute 47:1603. The department may waive penalties if the delay was due to reasonable cause rather than negligence, and all supporting documentation must accompany the request.¹¹

Failure to file outstanding returns can also prevent a corporation from closing its account with the Department of Revenue or the Secretary of State, which creates complications for any entity trying to dissolve or withdraw from Louisiana.

Records and Audit Exposure After Repeal

The Department of Revenue can audit past franchise tax periods for up to three years, or longer in cases of fraud or substantial understatement. Corporations should retain records from the 2025 and prior periods. If an assessment arrives that you disagree with, Louisiana Revised Statute 47:1568 gives 60 days from the assessment notice to pay under protest or file a formal dispute, with further appeal rights to the Louisiana Board of Tax Appeals and the state courts.¹²

What Replaced the Franchise Tax

The franchise tax repeal was part of a broader 2024 Third Extraordinary Session package that restructured corporate income tax, expanded the sales tax base, and eliminated dozens of credits and exemptions.¹³ The main changes:

Corporate income tax: Louisiana replaced its graduated brackets with a flat 5.5 percent rate, effective for tax years beginning on or after January 1, 2025. A $20,000 standard deduction is available.
Sales tax: The state rate was set at 5 percent beginning January 1, 2025, and the base was expanded to include digital products and interstate telecommunications services.
Inventory tax credit for C corporations: Sunsets effective June 30, 2026, though unused credits receive five additional carryforward years.
Related credits and exemptions: Dozens of franchise-tax-related credits, rebates, and exemptions were repealed for periods beginning on or after January 1, 2026, since the underlying tax no longer exists.

For capital-intensive businesses that carried large balance sheets relative to their income, the repeal is a meaningful reduction in overall state tax burden. For highly profitable businesses with modest capital, the trade-off against a higher flat income tax rate and broader sales tax base is less clear-cut. Either way, once the 2025 return is filed, franchise tax is off the calendar for good.

1
Louisiana State Legislature. Louisiana Laws RS 47:601
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LegiScan. LA HB3 2024 3rd Special Session
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Louisiana Department of Revenue. Corporation Franchise Tax Initial Return
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Louisiana Department of Revenue. Louisiana 2025 Corporation Income Tax Instructions
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Louisiana Department of Revenue. Corporation Income and Franchise Taxes
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Louisiana Department of Revenue. Louisiana 2024 Corporation Income Tax and 2025 Corporation Franchise Tax Instructions
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Louisiana Department of Revenue. Corporation Income and Franchise Taxes
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Legal Information Institute. Louisiana Administrative Code Title 61 Section I-308 – Exemptions
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Louisiana Department of Revenue. Corporation Income and Franchise, Partnership, and Fiduciary Income Return Filing Extensions
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Louisiana Department of Revenue. What Are the Penalties for Filing Late Tax Returns
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Louisiana Department of Revenue. Penalties
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Louisiana State Legislature. Louisiana Code RS 47:1568 – Assessment of Tax Shown on Face of Taxpayers Returns
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Louisiana Department of Revenue. 2024 Third Extraordinary Session Legislative Summaries