Local accountants and CPAs didn’t get much of a break over the recent holiday. Instead, as Business Report details, they were scurrying to make sense of the $1.5 trillion tax reform package signed into law by President Donald Trump days before Christmas.
There are still a lot of unanswered questions about the tax package and its long-term implications, but the consensus, for now, is that Louisiana, in general, will benefit in the short term.
For one, the plan allows Louisiana victims of the 2016 floods to amend their tax returns for that year to deduct flood-associated losses, which some estimate could bring as much as $500 million to the state. The law also waives a 10% penalty for flood victims who withdrew money from their 401(k)s to pay for flood damage.
Another provision expected to increase offshore oil revenue for Gulf states in the Gulf of Mexico Energy Security Act, which could bring another $100 million to Louisiana.
The benefits of the legislation aren’t as clear cut for many of the state’s small businesses.
Most pass-through businesses—sole proprietorships, partnerships and S corporations—will receive a 20% tax deduction on their taxable income, which, it is hoped, will allow business owners to reinvest that saved money back into their businesses.
And while many Louisiana taxpayers will see a reduction this year in their personal income tax bill, experts say the effects of the changes will vary depending on a family’s size, income and which deductions they are eligible to take.
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