Updated October 5, 2026. Quick answer: Yes. Louisiana starts from federal adjusted gross income and taxes it at a flat rate: “the individual income tax rate is a flat 3%.” Interest and dividends on U.S. government obligations are exempt, and interest on other states’ bonds bought on or after January 1, 1980 is taxable.
How Louisiana treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Taxed at the flat rate |
| Rate | “changed the income tax rate to a flat tax rate of 3%.” |
| Starting point | “Enter the amount of your Federal AGI.” |
| Other states’ bonds | For a resident, tax-exempt interest from “a state or political subdivision of a state other than Louisiana” is taxable when “The obligations were purchased on or after January 1, 1980.” |
| Louisiana bonds | Obligations of Louisiana, its political subdivisions and public corporations are exempt |
| U.S. obligations | Schedule E code 01E: “Interest and Dividends on U.S. Government Obligations” |
| Unidentified fund income | If a fund’s U.S. obligation share is not identified, “it is taxable and cannot be excluded.” |
A $20,000 example
Taxable dividends and interest of $20,000 add $20,000 x 3% = $600 of Louisiana tax. U.S. obligation interest is excluded first.
What changes in 2026
The latest documents read print no 2026 change to the way dividends and interest are taxed.
Federal rules
The state’s treatment sits on top of the federal one. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether Louisiana taxes capital gains, whether Louisiana taxes pensions, how Louisiana taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- 2025 IT-540 Instructions (Louisiana Department of Revenue): https://dam.ldr.la.gov/taxforms/IT540i-WEB-2025-Revised-7-26.pdf
- What are the individual income tax rates and brackets? (Louisiana Department of Revenue): https://revenue.louisiana.gov/tax-education-and-faqs/faqs/income-tax-reform/what-are-the-individual-income-tax-rates-and-brackets/
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.