New Sales Tax Relief for Contractors on Public Projects in Louisiana

Effective July 1, 2025, Act 384 (originally LA House Bill 578 of the legislative session) introduces a significant change that could reduce costs for contractors and subcontractors working on public construction projects.

Act 384 amends Louisiana law to extend state and local sales tax exemptions to contractors and subcontractors purchasing materials or services for government-funded construction projects.

The exemption applies to qualifying purchases made on or after July 1, 2025, regardless of when the public contract initially started.

Who is Eligible?

To qualify for the exemption:

  • The purchase must be made by a general contractor or subcontractor.
  • The purchase must be directly related to a public construction project.
  • The project must be funded by a governmental entity, such as a state agency, parish, municipality, or political subdivision.
  • The purchase must consist of materials and equipment rentals used in fulfilling the construction contract.

Exemption Process for Public Projects (RIB 25-023):

  • Each contractor and subcontractor must apply separately using Form R-85012 through Louisiana Taxpayer Access Point (LaTAP).
  • Applications must include the job description, contract number, government entity information, valid dates (or date range) for the project, and a copy of the contract.
  • Applications may also be submitted for public contracts executed before July 1, 2025, but the exemption only applies to purchases made on or after July 1, 2025.
  • Once approved, LDR will issue Form R-85014 (Exemption Certificate) to present to vendors.

Note: Contractors and subcontractors who have already been designated as an agent of a governmental entity using Form R-1020 are not required to obtain a Form R-85014. The R-1020 allows purchases of construction materials, services, leases, and rentals without payment of tax.

Projects Funded by PILOT Agreements (RIB 25-022):

  • Purchases tied to Payment in Lieu of Taxes (PILOT) agreements executed after July 1, 2025, are not automatically exempt.
  • To qualify, PILOT projects must first be approved by both LDR and Louisiana Economic Development (LED).
  • Requests for approval must include detailed project and financial information as outlined in RIB 25-022.

Key Action Items for Contractors:

  • Review your public contracts for eligibility.
  • Apply for exemption certificates promptly through LaTAP, including all required project details and a copy of the contract.
  • For PILOT-related projects, prepare the required documentation for LDR/LED approval.
  • Maintain proper records in case of audit.

If you have questions or need help navigating the application process, please reach out to our team.

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