Updated October 7, 2026. Quick answer: Residents are taxed on all income. Louisiana’s 2025 resident instructions say “Residents of Louisiana are taxed on all income” and exempt up to $12,000 of annual retirement income at age 65 or older.
Federal civil service pensions in Louisiana: does Louisiana tax federal pensions.
How Louisiana treats a pension earned elsewhere
| Item | What the state documents say |
|---|---|
| Nonresidents | Nonresidents file Form IT-540B. Its worksheet asks a nonresident to enter in the Louisiana column only the pension and annuity amount earned in Louisiana. The instructions do not mention the federal bar on state taxation of a nonresident’s retirement income. The source says: “pensions, and annuities that was earned in Louisiana”. This rests on the 2025 IT-540B instructions, Nonresident and Part-Year Resident Worksheet, line 6. |
| Residents with a pension earned elsewhere | Residents of Louisiana are taxed on all income regardless of where it was earned. Code 06E exempts up to $12,000 of annual pension, annuity or IRA income for a taxpayer age 65 or older, and each spouse can claim it on a joint return if both are 65 or older and each received retirement income. The source says: “Up to $12,000 of your annual retirement income may be exempted from state taxation if your filing status is single, head of household, married filing separately, or qualifying surviving spouse, and you are 65 years of age or older.” This rests on the 2025 resident IT-540 instructions. |
| Part-year residents (year of a move) | A part-year resident may file a resident return or a nonresident return on Form IT-540B, whichever is more beneficial. On Form IT-540B the Louisiana column holds income earned or sourced in Louisiana. The source says: “Part-year residents have the option to file a resident or nonresident return”. This rests on the resident IT-540 instructions and the IT-540B instructions. |
| Rate | Louisiana’s 2025 instructions state that Act 11 of the 2024 Third Extraordinary Legislative Session set a flat income tax rate of 3%. The source says: “a flat tax rate of 3%”. |
| Return to file | Residents file Form IT-540. Nonresidents and part-year residents with Louisiana source income file Form IT-540B. The source says: “Nonresidents must use Form IT-540B to determine their Louisiana tax”. |
A $40,000 move-year example
A retiree receives $40,000 of pension in the year of a move: $20,000 before the move date, as a Louisiana resident, and $20,000 after leaving.
The first $20,000 can be taxed by Louisiana; the rest is outside its reach under the federal rule below. At the 3% rate printed for 2025, the tax on it is computed as $20,000 x 0.03 = $600, before any exclusion or credit. Federal tax still applies.
The federal rule that protects a nonresident
4 U.S.C. 114(a) bars a state income tax on retirement income of an individual “who is not a resident or domiciliary of such State”. Retirement income means any income from a qualified retirement plan, a simplified employee pension, a 403(a) or 403(b) plan, an individual retirement plan, an eligible 457 plan or a governmental plan. Income from a nonqualified deferred compensation plan counts only if it is part of a “series of substantially equal periodic payments” made for life or for a period of at least 10 years, or is a payment after termination of employment from a plan that exists only to provide benefits above the Internal Revenue Code limits, so not every payment is covered. Retired pay of a member of a uniform service is also covered.
Related: how Louisiana taxes retirement income, whether Louisiana taxes pensions, out-of-state pension tax by state, and deferred compensation lump sums after a move.
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Answer againSources
- 2025 Louisiana Resident Individual Income Tax Instructions, IT-540 (Louisiana Department of Revenue): https://dam.ldr.la.gov/taxforms/IT540i-WEB-2025.pdf
- 2025 Louisiana Nonresident and Part-Year Resident Instructions, IT-540B (Louisiana Department of Revenue): https://dam.ldr.la.gov/taxforms/IT540Bi-2025-Revised-7-26.pdf
- 4 U.S.C. 114, Limitation on State income taxation of certain pension income (U.S. Government Publishing Office, 2023 edition): https://www.govinfo.gov/content/pkg/USCODE-2023-title4/html/USCODE-2023-title4-chap4-sec114.htm
Sources: the primary documents linked above, read on October 7, 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.