Adjustments to Income

Residents, Nonresidents, and Part-Year residents may have adjustments to federal adjusted gross income.  The adjustments could be additions to federal adjusted gross income or could be subtractions from federal adjusted gross income.  Taxpayers who received interest income or dividends from obligations of other states and who meet the conditions below should add the amount received to federal adjusted gross income.  A refund of previously exempted START contributions should also be added to federal adjusted gross income.

Interest income and dividends not reported on your federal return are taxable to Louisiana if all of the following conditions are met:
a. You are filing as a resident of Louisiana.

b. The interest is received from obligations of a state or political subdivision of a state other than Louisiana. (Obligations of the State of Louisiana, its political subdivisions, or public corporations created by them and their constituted authorities are exempt from Louisiana taxes.)

c. The obligations were purchased on or after January 1, 1980. Interest and dividends meeting these conditions are an addition to income.

Subtractions from federal adjusted gross income are considered to be items of exempt income and are allowable in accordance with statutory citations.  Examples of exemptions include interest income or dividends received from US government obligations, certain retirement benefits, an annual retirement income exemption for taxpayers who are 65 and over, to name a few.  A comprehensive list of income exclusions along with their description is listed below:

• Interest and dividends from U.S. government obligations are exempt from Louisiana income tax. In addition to direct payments from the U.S. Government, exempt amounts include amounts received from mutual funds that are identified by the mutual fund as income from investments in U.S. government obligations. If the amount is not specifically identified, it is taxable and cannot be excluded.
• The amount of retirement benefits received from the Louisiana State Employees' Retirement System is exempt from Louisiana income tax.
• The amount of retirement benefits received from the Louisiana State Teachers' Retirement System is exempt.
• Retirement benefits received from the Federal Retirement System are exempt.
• Other exempt retirement system benefits. Certain other public retirement system benefits are exempt.  A list of the eligible retirement systems and their statutory citations can be found within our publication, R-40058, Credits, Exemptions, Exclusions, and Deductions for Individual and Corporation Income Tax, Corporation Franchise Tax, Inheritance Tax and Gift Tax, which can be found on our website at www.revenue.louisiana.gov.
• Up to six thousand dollars ($6,000) of annual retirement income that is received by each taxpayer who is 65 or over is exempt from state taxation. Do not include retirement benefits claimed on under any other exemption.
• The amount of Social Security benefits that is taxable on your federal return is exempt from Louisiana tax.
• Income derived from sources on the reservation that have been earned or received by an enrolled member of a federally recognized Indian tribe who resides on that tribe’s reservation shall be exempted from Louisiana income tax. The income derived from sources outside of the reservation, including sources outside of Louisiana, that have been earned or received by an enrolled member of a federally recognized Indian tribe residing on that tribe’s reservation is taxable.  Louisiana considers income earned by a member of a federally recognized tribe residing off the tribe’s reservation in Louisiana as taxable regardless of the income source.
• START Savings Program - R.S. 47:293 allows account holders who file single, married filing separately, head of household, or qualifying widow(er) to exempt from Louisiana  income up to $2,400 of income per beneficiary.  Account holders who file married filing jointly can exempt up to $4,800 per beneficiary from Louisiana income. See Revenue Information Bulletin (RIB) 06-003 on the Department’s website.
• Residents of Louisiana who served in the armed services of the United States may be able to exempt military compensation earned outside of Louisiana.  If you (and/or your spouse) served 120 or more consecutive days on active duty outside of Louisiana, up to $30,000 of compensation paid by your branch of the armed services is exempt from Louisiana income tax.
• Taxpayers who received any gratuitous grant, loan, or other benefit directly or indirectly provided by a hurricane recovery entity shall be retroactively excluded if such income was included in the taxpayer’s federal adjusted gross income. Hurricane recovery entities that provided such benefits are the Road Home Corporation, the Louisiana Recovery Authority, or the Louisiana Family Recovery Corps.
• An exclusion of $1,000 is allowed for an individual who was previously employed as a public school classroom teacher by a school board in one of the following parishes impacted by Hurricane Katrina: Jefferson, Orleans, Plaquemines, St. Bernard, or St. Tammany.  In order to qualify for the exclusion, the teacher shall agree in writing to be employed as a public school classroom teacher for at least three years.
• An exclusion of $500 per tax year is allowed for individuals who volunteer for recreation departments.  To qualify for this exclusion, the taxpayer must serve as a volunteer for thirty or more hours during the taxable year and must be registered as a volunteer with a recreation department operated by the state of Louisiana or a political subdivision of the state.  The recreation department must certify that the taxpayer served as a volunteer and was compensated for their services.
• An exclusion of $500 per tax year is allowed for individuals who serve as volunteer firefighters.  To qualify for this exclusion, the taxpayer must complete twenty-four (24) hours of continuing education and be an active member of the Louisiana State Fireman’s Association or on the departmental roster for the State Fire Marshal’s Volunteer Fireman’s Insurance Program.
• Other: Disabled individuals claiming an exemption under R.S. 47:59.1 for making adaptations to their home should use this line in order to deduct the expenses from their gross income.  Persons receiving disability income under R.S. 47:44.1 (B) for a permanent, total disability may exclude up to $6,000 of annual disability income from their taxable income.  Persons claiming an S Bank shareholder exclusion should use this line to report the exclusion, which is equal to the S Bank shareholder’s nontaxable income from Louisiana taxable income.