Louisiana Revenue Information Bulletin No. 25-032, issued Dec. 16, 2025, details major changes to the state’s income tax treatment of S corporations (S corps) following Act 382 of the 2025 Regular Legislative Session. Effective for tax periods beginning on or after Jan. 1, 2026, Louisiana will treat S corps as pass-through entities, aligning with their federal tax treatment. This means all income, losses, deductions, and credits will automatically pass through to shareholders, eliminating the need for a special election.
Treatment of S Corporations
For tax years before 2026, S corps were taxed as C corporations (C corps) by Louisiana and were required to file Form CIT-620, with the option to elect the S corp exclusion. Starting in 2026, S corps will file an informational return using Form CIT-620. Instead of the S corps paying corporate income tax (unless they elect to, see below), the shareholders will report their share of income and tax on it on their own returns. As with C corps, the Louisiana Franchise Tax has also been repealed for S corps for years beginning on and after Jan. 1, 2026.
C Corporation Entity Election Still Available
S corps may still make an affirmative election to be taxed as a C corp for Louisiana income tax purposes. This may be advantageous for federal income tax purposes, as entity-level income is generally deductible by individual shareholders, whereas shareholder-level income may be limited depending on several factors. Electing corporations must pay estimated taxes and cannot file a composite return on behalf of their nonresident shareholders.
Composite Returns
S corps that do not elect to be taxed as a C corp can choose to file composite returns and make composite tax payments on behalf of their nonresident shareholders, provided they do not have a net loss for the period. In addition, if a composite return is filed for an S corp, the S corp makes a composite payment on behalf of the nonresident shareholder, and such composite return represents the nonresident shareholder’s only Louisiana income, then the shareholder does not need to file a separate Louisiana return.
Qualified Subchapter S Subsidiaries
Qualified Subchapter S Subsidiaries (QSubs) will also be treated as disregarded entities beginning on or after Jan. 1, 2026, with their income included on the parent S corp’s return.
Estimated Tax Payments
Estimated tax payments are no longer required from S corps that do not elect to pay tax as a C corp; however, they may be made voluntarily if a composite return is expected. Nonresident shareholders are responsible for their own estimated payments unless the S corp makes composite payments on their behalf.
Summary
The bulletin provides guidance on changes to the filing requirements and procedures related to new rules applicable to S corps. Such rules are intended to simplify compliance and align Louisiana’s tax treatment of S corps with federal standards.
If you have any questions about Louisiana’s new tax treatment of S corps and the option available to them to be treated as a C corp, please contact a CBIZ State and Local Tax professional.
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