Louisiana · Employee Retention Credit (ERC)
Employee Retention Credit (ERC) in Louisiana (2026)
Refundable credit of up to $7,000 per employee per quarter for eligible employers who retained workers during the COVID-19 pandemic (2020-2021 only). Louisiana has a flat 3% income tax, so a Louisiana filer's combined marginal rate on the next dollar at $52,800 of income is about 15% (12% federal + 3% LA).
2026 savings example for Louisiana
Planning estimate for a single filer earning $52,800 (Louisiana median household income in LevyIO's state dataset) who claims a $5,000 credit. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; LA tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$4,156
Federal savings
$4,156
$4,156 → $0 · 12% bracket
LA state savings
$0
Federal credit only; check for a state credit
Combined marginal rate
15%
Credits do not depend on the bracket
Statutory maximum for this item in LevyIO's dataset: $7,000.
Federal × Louisiana marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The LA column is the state marginal rate at the midpoint of each range. A credit saves its face value regardless of bracket.
| Federal bracket | Gross income (single) | LA marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 3% | 13% | $1,000 |
| 12% | $28,500 - $66,500 | 3% | 15% | $1,000 |
| 22% | $66,500 - $121,800 | 3% | 25% | $1,000 |
| 24% | $121,800 - $217,875 | 3% | 27% | $1,000 |
| 32% | $217,875 - $272,325 | 3% | 35% | $1,000 |
| 35% | $272,325 - $656,700 | 3% | 38% | $1,000 |
| 37% | Over $656,700 | 3% | 40% | $1,000 |
Eligibility & forms
Employers who retained employees during COVID-19 pandemic (2020-2021 only)
- Business operations suspended by government order, or
- Significant decline in gross receipts
- Available for Q1-Q3 2021 wages only
- Cannot double-dip with PPP forgiven wages
Federal forms: Form 941-X, Form 7200
Louisiana filing notes
Low 3% rate and federal standard deduction simplify planning. Be aware of very high combined sales tax. Louisiana offers homestead exemption on first $75,000 of assessed value. Social Security is fully exempt.
Common mistakes: Filing fraudulent or inflated claims (IRS moratorium active); Using ERC mill promoters with aggressive claims; Not accounting for PPP overlap restrictions.
Frequently asked questions
How much can the Employee Retention Credit (ERC) save a Louisiana taxpayer in 2026?
Credits reduce tax dollar-for-dollar. In LevyIO's example, a single filer with $52,800 of income (the Louisiana median household income in our state dataset) and a $5,000 credit would cut 2026 federal tax from $4,156 to $0, a $4,156 saving. Whether Louisiana offers a matching state credit depends on the LA return, so the estimate counts federal savings only.
What is the Louisiana income tax rate for 2026?
Louisiana has a flat 3% income tax. The LA standard deduction in LevyIO's dataset is $14,600 single / $29,200 married. Flat 3% (2025). Uses federal standard deduction. Highest average combined sales tax (10.11%, Tax Foundation 2026). Low property taxes.
Who qualifies for the Employee Retention Credit (ERC) in Louisiana?
Employers who retained employees during COVID-19 pandemic (2020-2021 only). The federal rules are the same in every state; the requirements are: Business operations suspended by government order, or; Significant decline in gross receipts; Available for Q1-Q3 2021 wages only; Cannot double-dip with PPP forgiven wages. Louisiana filers should confirm on the LA return whether the state follows the federal treatment.
Which forms do I file to claim the Employee Retention Credit (ERC)?
Federal: Form 941-X, Form 7200. Louisiana: check the Louisiana Department of Revenue instructions for the matching state schedule. Common mistakes: Filing fraudulent or inflated claims (IRS moratorium active); Using ERC mill promoters with aggressive claims; Not accounting for PPP overlap restrictions.
Employee Retention Credit (ERC) in other states
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.