State playbook - Louisiana

Matchbook, tuned for Louisiana payroll, School Readiness credits, and hurricane season.

Louisiana's 2025 flat 3% income tax widens the Section 125 employee stack, a $7,700 SUI wage base narrows employer SUI savings to entry-level hires, the School Readiness (now Workforce Child Care) Tax Credits offer the nation's most generous childcare credit system - and Francine, Ida, Laura, Delta, and Katrina make IRC Section 139 a recurring, not hypothetical, lever.

What Matchbook ships for Louisiana Tax profile
Tax mechanics

Payroll tax in Louisiana

State income tax

Applies

Effective January 1, 2025, Act 11 (Nov 2024 special session) replaced Louisiana's graduated 1.85%-4.25% brackets with a flat 3% rate. Standard deduction rose to $12,500 single / $25,000 joint-head-of-household. Employee pre-tax savings stack is federal marginal rate + 7.65% FICA + 3% Louisiana. A $3,300 healthcare FSA election saves about $1,149 for a 22% federal bracket Louisiana employee versus about $1,050 for the same Florida employee. Matchbook recalibrated the Louisiana marginal stack from the repealed bracket logic to the flat 3% for 2025 and 2026 payrolls.

Louisiana Unemployment Insurance (UI)

Wage base $7,700 (2026, reduced from $7,700 in 2025 per LWC 2026 rate table)

Rate range: 0.09%-1.94% positive-rated, 2.20%-6.20% negative-rated; new-employer rate 1.16% (2026)

With a $7,700 wage base, Section 125 salary reductions produce zero employer UI savings for any full-time salaried employee - they cross the base within the first quarter. The only Louisiana staff for whom Section 125 reduces UI liability are entry-level, part-time, or seasonal workers whose YTD wages stay under $7,700. Matchbook suppresses the UI savings line in the Louisiana employer ROI report for anyone above the base, and surfaces it only on the quick-service, retail, hospitality, and agricultural segments where it actually moves.

Employer FICA

7.65% / 1.45% split

Employer FICA is 7.65% on wages up to the Social Security wage base ($176,100 in 2025; projected about $183,600 in 2026) and 1.45% above it. The durable Louisiana employer payroll-tax win on Section 125 and Section 132(f) elections is the 7.65% FICA match plus - because Louisiana has income tax - a 3% state tax savings that accrues to the employee, not the employer.

Employer credits and levers

State and federal credits worth stacking

Credits that most broker ROI decks omit. Matchbook surfaces these in the employer report.

Louisiana School Readiness Tax Credits (renamed Workforce Child Care Tax Credits, eff. Jan 1 2026)

Five-pronged refundable-credit system unique to Louisiana: (1) families, (2) child care providers, (3) child care directors and staff, (4) businesses that support child care, (5) resource and referral agencies. Act 454 (2025 Regular Session) doubled the refundable business credit for construction, renovation, payments to a rated center, or reserving slots for employees, and increased the credit rate at 3-, 4-, and 5-star rated facilities. This is the most generous employer childcare credit of any state.

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LDR RIB 25-029 - Workforce Child Care Tax Credits administrative guidance

Louisiana Department of Revenue bulletin on the post-Act-454 credit: refundability, stacking rules with federal IRC Section 45F, and documentation requirements for employers claiming business-supported child care expenses.

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Federal IRC Section 45F (stacks with Louisiana Workforce Child Care Credit)

Federal employer-provided childcare credit. 25% credit with $150K cap in 2025; rises to 40% with $500K cap in 2026, and 50% with $600K cap for small employers. Matchbook models the combined Louisiana plus federal benefit when a Louisiana employer considers on-site, sponsored, or reserved-slot care. The state credit is refundable; the federal credit is not - order of application matters.

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Louisiana Quality Jobs Rebate (sunset - Advance Notifications through June 30, 2025)

Payroll rebate of up to 6% of annual wages for up to 10 years for qualifying industries (bioscience, manufacturing, software, clean energy, headquarters, MRO, oil and gas service). Thresholds: 5 net new jobs and $225K payroll (<=50 LA employees) or 15 jobs and $675K (>50). Act 11 (Nov 2024) sunset the program; Matchbook flags contracts already in the 10-year window.

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Louisiana Enterprise Zone (sunset - Advance Notifications through June 30, 2025)

Income and franchise tax credits plus sales/use rebate for creating 5 net new full-time jobs with 50% hired from targeted groups. Sunset alongside Quality Jobs. Matchbook tracks contract vintages so CFOs don't overstate forward-year credits.

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Louisiana Digital Interactive Media and Software Tax Credit

25% refundable credit on qualified Louisiana payroll and 18% on qualified production expenditures, with no cap and no minimum. Employers may take the credit against income tax with refund of overages, or elect 85% cash rebate. Particularly relevant to New Orleans and Baton Rouge software, games, and interactive-media employers post-Quality-Jobs sunset.

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Household programs

State programs that change what your employees should elect

Matchbook coordinates these against DCFSA, FSA, and HSA elections at the household level.

Childcare subsidy

Louisiana Child Care Assistance Program (CCAP)

Subsidy administered by LDOE for households at or below 85% State Median Income, for children under 13 (under 18 with disabilities), with a work/school requirement of at least 20 hours/week. Priority placement in Type III licensed and star-rated centers.

Matchbook: CCAP reduces out-of-pocket dependent-care cost and therefore reduces the correct DCFSA election. Matchbook's Louisiana screener asks households whether they are CCAP-enrolled or eligible before recommending DCFSA contribution levels, and checks whether the provider is Type III (CCAP-payable) vs Type I/II (not).

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Preschool

Cecil J. Picard LA 4 Early Childhood Program (Pre-K for 4-year-olds)

Six-hour-a-day publicly funded Pre-K for 4-year-olds at or below 200% FPL (plus categorical eligibility for homeless and foster children). Typically runs school-year hours, so wrap-around care remains DCFSA-eligible.

Matchbook: The correct DCFSA election for an LA 4 family is full-day center cost minus the six LA 4 instructional hours, not zero. Matchbook models the wrap-around split explicitly and does not default LA 4 households to zero DCFSA.

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Health programs

Coverage coordination checkpoints

LaCHIP (Louisiana CHIP)

Subsidized children's health coverage up to 217% FPL free, with the LaCHIP Affordable Plan (LAP) covering children between 217% and 255% FPL at a small monthly premium. Administered by Louisiana Department of Health under Healthy Louisiana managed-care plans.

Matchbook: Employees declining dependent coverage on the employer plan should be screened against LaCHIP and LAP thresholds before Matchbook defaults to the family tier. Between 217% and 255% FPL, the LAP premium is usually lower than the employee share of employer family coverage.

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Healthy Louisiana Medicaid - post-unwind recovery

Louisiana disenrolled roughly 400,000 enrollees from its Medicaid program between 2023 and early 2024 during unwinding, including a disproportionate share of expansion adults and children. 80% of renewals were automatic (ex parte) - higher than the national 60% - but procedural terminations remain a material recovery opportunity at open enrollment.

Matchbook: Matchbook's Louisiana screener flags households that may have lost Medicaid or LaCHIP for reasons unrelated to eligibility and routes them to the employer plan special enrollment, Healthy Louisiana re-application, or Marketplace with APTC.

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ACA Marketplace (Federally Facilitated Marketplace)

Louisiana uses HealthCare.gov. 91% of 2026 enrollees qualified for APTC; average subsidy $674/month. Enhanced premium tax credits expired end of 2025, so Louisiana 2026 net premiums rose materially, and the 400% FPL subsidy cliff returned. Family-glitch fix still applies.

Matchbook: If employer family coverage exceeds the 2026 affordability threshold (9.96% of household income), Matchbook surfaces the Marketplace dependent subsidy path, and explicitly models the return of the 400% FPL cliff for Louisiana households near the ceiling.

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Retirement and wealth

State-level retirement and wealth context

Louisiana ABLE

Louisiana's Section 529A program for disabled beneficiaries, administered by LOSFA. 2025 annual contribution limit $19,000 (rising to $20,000 in 2026); employed beneficiaries may add up to $15,060 more via ABLE to Work. State account cap $500,000.

Matchbook: FSA or HSA dollars reimburse medical expenses; Louisiana ABLE covers broader qualified disability expenses. When SSI asset limits are in play, Matchbook routes disability-related spend to ABLE first and surfaces it at open enrollment for employees who report a qualifying disability.

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Louisiana START K12 and START Saving (529) - state income tax deduction

Deposits to START 529 accounts are deductible from Louisiana taxable income up to $2,400 per year per beneficiary ($4,800 joint), with unused deduction carried forward to later years. Louisiana also pays a 2%-14% earnings enhancement on account balances based on account-owner income, paid when funds are used for qualified expenses.

Matchbook: Louisiana's new 3% flat rate makes the per-dollar state-tax savings on a START contribution 3% - smaller than under the old 4.25% top bracket but still real. Matchbook recommends START (over out-of-state 529s) for Louisiana residents to capture the deduction and the unique state earnings enhancement.

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Section 132(f) commuter

Pre-tax commuter reality in Louisiana

2026 IRC Section 132(f) cap is $340 per month for transit and $340 per month for qualified parking (up $15 from $325 in 2025).

Parking and state credits

Parking: New Orleans CBD monthly parking commonly sits between $200-$350 and can reach or exceed the $340 cap near the French Quarter and Superdome; Baton Rouge, Shreveport, and Lafayette parking usually sits well below the cap.

State credit: None - Louisiana has no state-level commuter tax credit. Section 132(f) elections reduce Louisiana taxable wages, producing a 3% state-tax savings for the employee on top of FICA.

Disaster readiness

Louisiana disaster-relief playbook

IRC Section 139 qualified disaster relief payments are not W-2 wages: no FICA, no FUTA, no federal income tax withholding, and the employer gets a full deduction. Triggered by a federal disaster declaration, which recent Louisiana hurricanes (Katrina 2005, Laura 2020, Delta 2020, Zeta 2020, Ida 2021, Francine 2024) and repeated major flood events have all qualified for. Louisiana is the single most IRC 139-active state in the country.

  • Pre-drafted Section 139 policy template so Louisiana employers can disburse tax-free relief within 48 hours of a federal declaration - critical because Gulf hurricanes can give as little as 72 hours' lead time.
  • Post-storm Section 125 election-change guidance: a hurricane alone is not a listed change-in-status event under Treas. Reg. 1.125-4 - it qualifies only when it triggers a change in residence, employment, or cost-of-coverage (frequent after Laura and Ida displacements).
  • FEMA Individual Assistance and SBA disaster-loan coordination: IRS Section 139 payments generally stack with FEMA IA, but Matchbook flags duplication risk in the disbursement log (particularly for housing expense categories).
  • IRS postponed-deadline tracking: Francine (DR-4817-LA) pushed many Louisiana filing and payment deadlines to Feb 3, 2025. Matchbook's Louisiana calendar ingests LA-specific IRS disaster notices and reschedules employer and employee tax-sensitive deadlines automatically.
  • Louisiana-specific employer disaster leave review (Louisiana has no statutory paid disaster leave, so employer policy is the governing rule) and coordination with Healthy Louisiana provider-network disruption after landfall.
Matchbook for Louisiana

What we ship specifically for Louisiana employers

  • Flat-3% recalibration in the employee savings engine - repeal the old graduated-bracket logic and widen DCFSA and FSA under-election guardrails to reflect the new flat marginal stack for 2025 and 2026 Louisiana payrolls.
  • Workforce Child Care Tax Credit (Act 454) plus federal IRC Section 45F stacking calculator in the employer ROI report - Louisiana's refundable state credit plus non-refundable federal credit is the highest-ROI on-site-care stack in the country, especially for 3-, 4-, and 5-star rated facilities.
  • Suppress the UI savings line for salaried workers in the Louisiana employer FICA and SUI report - the $7,700 wage base makes it misleading - and surface it only for part-time, seasonal, and entry-level segments.
  • CCAP and LA 4 wrap-around logic in the DCFSA recommender, ingesting LDOE Type-I/II/III provider rating rules so Matchbook does not recommend DCFSA spending on non-CCAP-payable care for subsidy-eligible households.
  • IRC Section 139 hurricane playbook - pre-drafted employer policy, post-storm Section 125 election-change guidance, and automatic re-scheduling of tax-sensitive dates from LA-specific IRS disaster notices.
  • LaCHIP / LAP and Medicaid redetermination screener at open enrollment to recover procedurally-disenrolled dependents from the 2023-2024 unwind.
  • START 529 default for Louisiana residents in the college-savings module to capture the $2,400/$4,800 deduction and the 2%-14% earnings enhancement, which no out-of-state 529 offers.
  • Benefits graph ingests: LDR withholding formula and RIBs (including RIB 25-012 and RIB 25-029), LWC 2026 UI rate table, LED incentive bulletins, LDOE CCAP and LA 4 eligibility, LDH Medicaid eligibility manual charts, FEMA Louisiana DR numbers, and HealthCare.gov 2026 Louisiana rate filings.
Sources

Primary sources for this playbook

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