LA
Does Louisiana tax tips and overtime?
The federal deduction and the Louisiana deduction are separate questions. Here is where Louisiana actually lands, and why.
How Louisiana builds its tax base
Louisiana starts from your federal adjusted gross income. Both deductions are below-the-line — they reduce federal taxable income but leave AGI untouched — so neither reaches this state's return automatically. Anything you get here had to be legislated separately.
Tips in Louisiana
Still taxedLouisiana computes tax table income starting from federal AGI (Form IT-540, Line 7), and IRC §224 is a below-the-line deduction that never reduces federal AGI, so it cannot flow through; Louisiana has enacted no offsetting state deduction — 2025 Regular Session HB 195 and HB 414 both died in House Ways & Means, and LDR's official 2025 Regular Session Legislative Summaries list no tip or overtime act (no LDR guidance adopting §224 found through the 2026 session).
Source: Louisiana Department of Revenue, 2025 Form IT-540 Instructions (Line 7: "Enter the amount of your Federal Adjusted Gross Income (Federal AGI)... from Federal Form 1040 or 1040-SR, Line 11b") · last reviewed
Overtime in Louisiana
Still taxedSame mechanism — IRC §225 reduces federal taxable income but not federal AGI, which is Louisiana's Line 7 starting point, and no Louisiana deduction was enacted (HB 414 and HB 194 of the 2025 Regular Session died in committee; LDR's 2025 Regular Session Legislative Summaries contain no reference to tips or overtime).
Source: Louisiana Department of Revenue, 2025 Regular Session Legislative Summaries (Income Tax section — no tip or overtime act listed) · last reviewed
Whatever your state does, your payroll taxes do not change
Both deductions reduce income tax only. Social Security and Medicare are still charged on the same wages, in every state.