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.

While interpretations may vary, it is our understanding that 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.

How to Claim the Exemption:

  • Apply for an exemption certificate through the Louisiana Department of Revenue (LDR). Click here to view the current application.
    • The general contractor or their subcontractor must provide a copy of the construction contract when applying for a certificate of exemption from the department.
    • Once issued, the certificate will include the job description, contract number, state or local government entity identifying information, and valid dates or a date range for the project.
  • Each contractor and subcontractor must apply individually.
  • Certificates must be presented to vendors at the time of purchase. 

Important Exclusion: Projects funded through Payment in Lieu of Taxes (PILOT) agreements do not qualify, unless approved by both the LDR and Louisiana Economic Development (LED).

Action Items for Contractors:

  1. Review your current and upcoming public contracts to identify eligible projects.
  2. Apply for an exemption certificate through the LDR as soon as possible.
  3. Notify your subcontractors so they can apply for their own certificates.
  4. Maintain accurate records of all exempt purchases in the event of an audit.

If you have questions or need support navigating these changes, please don’t hesitate to contact us.

Sales Tax Exemption Application
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