Updated October 16, 2026. Quick answer: Louisiana taxes IRA distributions at a flat three percent and lets a person 65 or older “may exclude up to $12,000 of annual retirement income”, but its documents read do not say whether an inherited IRA distribution counts as the beneficiary’s own retirement income.
Louisiana at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | Taxed as income at a flat three percent, with an exemption for annual retirement income of people 65 or older |
| Do the state’s documents address beneficiaries? | Not addressed: the documents read do not mention inherited IRAs |
| Retirement exclusion or credit | $12,000 of annual retirement income per eligible individual aged 65 or older, indexed to CPI-U from January 1, 2026 |
| Rate in the documents read | Flat three percent (La. R.S. 47:32) |
| State inheritance or estate tax | Not mentioned in the documents read |
| Changed for 2026? | The exemption increased from $6,000 to $12,000 and is indexed to CPI-U beginning January 1, 2026; no adjusted figure is printed |
What the Louisiana documents say
The IT-540i instructions define annual retirement income as “distributions from a pension, an annuity, or an individual retirement arrangement (IRA)” that you receive and report on the federal return.
The statute is written around the recipient’s age: “received by an individual sixty-five years of age or older” is exempt up to twelve thousand dollars. The instructions note the exemption “increased from $6,000 to $12,000”.
La. R.S. 47:32 sets the rate: the tax is “computed at the rate of three percent on net income”.
The federal 10-year rule and your Louisiana tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For Louisiana’s own death taxes, see Louisiana inheritance tax.
What the documents do not say
- The documents read do not mention inherited IRAs. Their beneficiary and death wording covers a decedent’s final return, a funeral and burial credit for a pregnancy-related death, trust or estate income distributed to a beneficiary, and beneficiaries of START education savings accounts.
- They do not say whether the income must come from the recipient’s own retirement account.
- They say nothing about a deduction or credit for estate tax or income in respect of a decedent.
Common mistakes
- Assuming Louisiana’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with a Louisiana preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether Louisiana taxes 401(k) and IRA withdrawals, Louisiana retirement taxes, Louisiana inheritance tax, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- 2025 Louisiana Resident Income Tax Instructions (IT-540i): https://dam.ldr.la.gov/taxforms/IT540i-WEB-2025-Revised-7-26.pdf
- La. R.S. 47:44.1 Annual retirement or disability income; exemption from taxation: https://legis.la.gov/legis/Law.aspx?d=102133
- La. R.S. 47:32 Rates of tax: https://legis.la.gov/legis/Law.aspx?d=101946
- Is there a list of retirement system benefits that may be excluded from Louisiana income tax? (FAQ): https://revenue.louisiana.gov/tax-education-and-faqs/faqs/individual-income-tax/is-there-a-list-of-retirement-system-benefits-that-may-be-excluded-from-louisiana-income-tax/
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.