Louisiana taxes none of your Social Security and fully exempts government pensions, then gives most other retirees a $12,000 break after 65. Whatever falls above that exclusion, mainly IRA and 401(k) withdrawals, is taxed at a flat 3 percent. So how much Louisiana takes depends on the kind of pension you have and how much you draw from retirement accounts. This guide walks through how Louisiana retirement income tax treats each kind of income, what the recent changes mean, and how it factors into paying for care.

The short version: Social Security and government pensions are tax-free, and a $12,000-per-person exclusion shields most of the rest.

Louisiana Retirement Income Tax at a Glance

Louisiana sorts retirement income into three buckets, and most retirees land mostly in the exempt ones.

Social Security is exempt. Louisiana does not tax Social Security benefits. Not a dollar of your monthly check is touched by the state.

Government pensions are exempt. Louisiana state and local government pensions, federal Civil Service pensions, and military retirement income are fully exempt. If your pension comes from public service, the state does not tax it.

Other retirement income gets a $12,000 break. For pensions and annuities that are not government-exempt, plus IRA and 401(k) withdrawals, residents 65 and older can exclude up to $12,000 per person; income above that is taxable.

The Louisiana Department of Revenue administers these rules and confirmed the exclusion increase as part of the state's income tax reform.

Louisiana Retirement Income Tax: How It Works

Start with the pension question, because that is what decides which bucket you are in.

Government pensions get full exemption. If your pension comes from Louisiana state or local government, the federal Civil Service, or military service, none of it is taxed by Louisiana. There is no dollar cap on this exemption; the full government pension is exempt. A retired state employee, a former federal worker, and a military retiree all keep their pension free of Louisiana tax.

Everything else taxable runs through the $12,000 exclusion. Private pensions, annuities, IRA withdrawals, and 401(k) distributions are taxable in principle, but residents 65 and older can exclude up to $12,000 per person each year. Only the amount above $12,000 is actually taxed. Because the exclusion is per person, a married couple who are both 65 or older can shield up to $24,000 of this income between them. You claim the exclusion on Schedule E of the Louisiana resident income tax return, Form IT-540, so if you are preparing your own return, that is the line where it comes off your taxable income.

Roth IRA money works differently. A qualified Roth IRA withdrawal is already free of federal income tax, so it never lands in the income Louisiana starts from, and the $12,000 exclusion does not come into play. The exclusion matters for pretax accounts, traditional IRA and 401(k) money, whose withdrawals are taxable to begin with.

So the question that decides your Louisiana tax bill is what your pension is and how much non-exempt retirement income you draw past the exclusion.

The Exclusion Just Got Bigger

The $12,000 figure is new, and it matters if you are reading older guidance.

Effective January 1, 2025, Louisiana doubled the annual retirement income exclusion for those 65 and older, from $6,000 to $12,000 per person. Going forward, the exclusion is indexed to inflation, so it should rise over time rather than staying frozen.

Two practical points:

Under 65, this exclusion does not apply, so non-exempt retirement withdrawals are taxable in full. The birthday matters here, the way it does not for a government pension, which is exempt at any age.

What Louisiana Retirement Income Tax Costs You

Louisiana moved to a flat individual income tax of 3 percent for 2025. So once your taxable retirement income clears the exemptions and the $12,000 exclusion, the rate on it is a flat 3 percent, not a climbing scale.

What this means in practice:

Here is a hypothetical to show the mechanic. The figures below are illustrative only, not a real case and not a prediction of your own result.

Say a single retiree who is 68 withdraws $20,000 from a traditional IRA in a year, with Social Security and a government pension already exempt. The $12,000 exclusion lowers the taxable withdrawal to $8,000. At the flat 3 percent rate, that is about $240 in state tax on the IRA money. The exempt income beside it adds nothing to the bill.

The lesson: between the exemptions, the $12,000 exclusion, and a 3 percent flat rate, Louisiana takes a modest cut of most retirees' income.

At a Glance: Every Income Type

Income type Taxed by Louisiana? Notes
Social Security benefits No Fully exempt at any age
Government pensions (LA, federal Civil Service, military) No Fully exempt, no dollar cap
Other pensions, IRA and 401(k) withdrawals Partial Taxable at flat 3% above the exclusion
Senior / age-based exclusion Yes Up to $12,000 per person for residents 65+ on non-exempt retirement income; CPI-indexed

Why This Matters for Care

State tax is not an abstraction when you are pricing assisted living or in-home help. It is money that leaves your budget before the care bill arrives. In Louisiana, the bite is small for most retirees.

A government pension and Social Security come through untouched, and the first $12,000 per person of other retirement income is shielded after 65. So a large share of the income you planned for housing, health, and care stays whole, and only the portion above the exclusion faces the flat 3 percent.

That still belongs in an honest funding plan. If you draw heavily from an IRA or 401(k), figure the tax on the amount above your $12,000 exclusion and build that after-tax number into your care budget. Our guide to building a senior care funding plan walks through how to map income, taxes, and care costs together, and the broader guide to paying for senior care covers Medicaid, VA benefits, and private-pay options once you know what your after-tax income actually is. Our guide to retirement accounts for care covers how to time those withdrawals when care costs enter the picture.

Trying to figure out what your income really covers? Talk with Brevy's care navigator to map your after-tax retirement income against real care costs.

Frequently Asked Questions

Does Louisiana tax Social Security benefits?

No. Louisiana does not tax Social Security benefits at all. The federal government may still tax part of your benefit depending on your total income, but the state does not.

Does Louisiana tax pensions?

Government pensions are fully exempt, including Louisiana state and local, federal Civil Service, and military retirement. Other pensions are taxable, but residents 65 and older can apply the $12,000 per-person exclusion to them.

How much retirement income can I exclude in Louisiana?

Residents 65 and older can exclude up to $12,000 per person of non-exempt retirement income, including IRA and 401(k) withdrawals. This increased from $6,000 effective January 1, 2025, and is now indexed to inflation.

Does Louisiana tax 401(k) and IRA withdrawals?

Yes, but only above the exclusion. For residents 65 and older, the first $12,000 per person is excluded, and amounts above that are taxed at the flat 3 percent rate.

Are Roth IRA withdrawals taxed in Louisiana?

Generally no. A qualified Roth IRA withdrawal is already free of federal income tax because you contributed after-tax dollars, so it does not enter the income Louisiana taxes in the first place. The $12,000 exclusion is aimed at pretax accounts, traditional IRA and 401(k) withdrawals, whose distributions are taxable to begin with.

Where do I claim the retirement income exclusion on my Louisiana return?

You claim it on Schedule E of the Louisiana resident income tax return, Form IT-540. That schedule is where exempt retirement income and the age-based exclusion come off your Louisiana taxable income.

What is Louisiana's income tax rate for retirees?

Louisiana moved to a flat individual income tax of 3 percent for 2025. It applies to taxable retirement income after the exemptions and the $12,000 exclusion.

Learn More

FinancialLouisiana Senior Property Tax ReliefLouisiana seniors 65+ can freeze their property's assessed value and cut their tax bill. This guide covers the SAL freeze, income limit, and how to apply. FinancialHow Each State Taxes Retirement IncomeRetirement income tax varies enormously by state. Learn how states treat Social Security, pensions, and IRA or 401(k) money, and find your state's rules. FinancialHow to Pay for Senior CareHow to pay for senior care: what it costs nationally and how Medicaid, Medicare, VA benefits, and private pay each fit. Who qualifies, what's covered, in 2026. FinancialBuilding a Senior Care Funding PlanA step-by-step plan to pay for senior care: estimate the cost, inventory income and assets, find the payers you qualify for, sequence them, and get free help. FinancialRetirement Accounts for CareHow to use a retirement account to pay for senior care: the tax on IRA and 401(k) withdrawals, the early-penalty exceptions, RMDs at 73, and the tax-spike trap.

Find personalized help mapping your Louisiana retirement income against care costs at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.

BC

Brevy Care Team

Expert eldercare guidance from Brevy's team of healthcare professionals and researchers.