Alabama Should Look to Louisiana's Major Tax Reform Package to Benefit State Citizens

February 23, 2025 - There has been talk about tax reform in Alabama through the years. While there has been work around the edges, it is not what a lot of politicians have promised. However, one of our neighbors has tackled it head on.

Lousiana Governor Jeff Landry called the state legislature into special session this past November. The session’s focus was Lousiana’s tax structure and to overhaul the state’s tax code. During the session, lawmakers passed bills that in most cases require voter approval, which:

- Lower personal income taxes to a flat rate of 3 percent, while almost all taxpayers in Alabama pay 5 percent.

- Reduce the income tax rate for corporations from 7.5 percent to a flat rate of 5.5 percent, which is a percentage point less than Alabama.

- Eliminate the corporate franchise tax.

– Rewrite major portions of the budget and tax sections of the Louisiana constitution to limit growth in future state spending.

- Set the state’s sales tax rate at 5.0 percent for 5 years, then reduces it to 4.75 percent (but like Alabama, combined local sales taxes are usually higher than our 4 percent state rate).

Alabama leaders should follow Louisiana’s lead and tackle tax reform to reduce taxes and reign in government spending. This will also result in Alabama being more competitive with other states, that are reducing or eliminating their taxes. Other neighboring states like Florida and Tennessee do not levy an income tax. In 2022, Mississippi passed its state’s largest income tax break in history, and by 2027 the tax will be phased down to just 4 percent.

Alabama has made progress in trying to reduce its grocery tax, by reducing it by a penny, but still has a lot of work to remove it completely as has most states. As with the federal government, Alabama should also continue to work to simplify its tax code.

Now is the time for Alabama to step up and push forward with bold policies to return more monies to our citizens and make our state more competitive with our neighbors.

Paul DeMarco is a former member of the Alabama House of Representatives and is a native of the state. He can be found on X, formerly Twitter, at @Paul_DeMarco

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