Sweeping Sales Tax Changes Enacted in Louisiana

It has been a busy summer for sales tax updates, as numerous bills went into effect last month. Included in this was Louisiana House Bill 578, which was signed into law on June 20, 2025, as Act 384, with many of its provisions going into effect on July 1, 2025. This legislation represents a wide-ranging overhaul of Louisiana’s sales and use tax framework, with implications for definitions, exemptions, and compliance procedures.

Of primary significance is a technical but critical change for foreign and e-commerce sellers. The sales of digital products now count toward Louisiana’s $100,000 economic nexus threshold, which may bring more remote businesses into the state’s tax net.  Throughout the legislation, the addition of “digital product” to “tangible personal property” is most notable. When factoring economic nexus, not only does the seller need to include tangible personal property, products transferred electronically, and services, but also digital products.

The bill expanded sales and use tax exemptions for a variety of entities and services, including:

• Nonprofit organizations
• Sickle cell disease organizations
• Habitat for Humanity
• The Edward Via College of Osteopathic Medicine
• Qualifying radiation therapy treatment centers
• Certain government and intergovernmental transactions

The bill also extended healthcare-related exemptions to include digital products and software used by licensed healthcare providers, effective January 1, 2025. This change includes prewritten software access services and information services used for diagnosis, treatment, or health data management.

The construction industry also received an exemption update. Effective July 1, 2025, general contractors and subcontractors may claim exemptions for purchases made on behalf of state and local governments. Contractors must obtain a certificate of exemption from the Department of Revenue and present it to vendors at the time of purchase to qualify for the exemption.

Other significant changes include:

• A broadened definition of “vessel” to cover commercial fishing vessels, drilling ships, and barges, expanding eligibility for related exemptions. Starting July 1, 2025, exemptions extend to software, digital products, and information services used in vessel operations.
• Repairs to tangible personal property that is shipped out of state, which become exempt from state sales tax on January 1, 2025. Local governments may adopt similar exemptions beginning July 1, 2025.
• Adaptive driving equipment, which will be exempt from both state and local tax starting July 1, 2025.

As more states continue to find new ways to target online business, companies will have to remain vigilant to ensure that they haven’t unknowingly crossed nexus thresholds (Louisiana Legislature. “House Bill 578, Act No. 384.” Regular Session, signed June 20, 2025. Louisiana State Legislature)