Updated October 19, 2026. Quick answer: On the Louisiana IT-540, retirement income that Louisiana exempts is entered by code on Schedule E, lines 4A through 4G. Codes 02E to 05E cover specific retirement systems, and code 06E is the annual retirement income exemption for taxpayers 65 or older, figured on a worksheet. The Schedule E result carries to Form IT-540, line 7.
More on public pension systems, topic by topic: Louisiana Sheriffs Back-DROP.
What this form does
The 2025 instructions flag the exemption in their What’s New list: “The annual retirement exemption for individuals age 65 and older has increased”. Exempt items are entered by code on lines 4A through 4G of Schedule E, which belongs to the Louisiana resident return (Form IT-540).
See Louisiana retirement taxes for the state-level picture of how Louisiana treats retirement income, and whether Louisiana taxes pensions.
Who it applies to
Codes 02E to 05E depend on which retirement system paid you, as the table below shows. Code 06E has its own conditions: “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.”
For joint filers: “If your filing status is married filing jointly, both you and your spouse are age 65 years or older, and each of you received annual retirement income, up to $12,000 of the annual retirement income that each taxpayer receives may be exempt from state taxation.”
The instructions define the income: “that is taxable to Louisiana is any distributions from a pension, an annuity, or an individual retirement arrangement (IRA) that you receive and report on Federal Form 1040 or 1040-SR, Lines 4b and 5b.”
The lines, one by one
| Line or code | What the instructions say |
|---|---|
| Exempt income lines 4A to 4G | “Enter the description, identifying code, and dollar amount in the appropriate spaces on Lines 4A through 4G.” |
| Code 02E, State Employees | “Enter the amount of retirement benefits received from the Louisiana State Employees’ Retirement System.” |
| Code 03E, State Teachers | “Enter the amount of retirement benefits received from the Louisiana State Teachers’ Retirement System.” |
| Code 04E, Federal | “Enter the amount of retirement benefits received from a Federal Retirement System, including benefits received from a military survivor benefit plan.” |
| Code 05E, Other | “Enter the amount of retirement benefits received from any retirement systems whose benefits are specifically exempted by law from Louisiana income tax.” |
| Code 05E, systems named | “This includes retirement systems for school employees, State Police, municipal employees and police, parochial employees, firefighters, Assessors, Clerks of Court, District Attorneys, Registrars of Voters, Sheriffs, and certain local retirement systems.” |
| Code 05E, what to enter | “In the space provided, enter the name of the retirement system or the statutory citation exempting these benefits from Louisiana income tax.” It adds “You must attach a copy of your 1099-R(s) to your return.” |
| Codes 02E to 05E, dates | “Indicate the month and year that you or your spouse retired in the appropriate space.” |
| Code 06E | “Annual Retirement Income Exemption for Taxpayers 65 Years of Age or Older” |
| Code 06E, other codes | “Do not include retirement benefits that are coded as 02E, 03E, 04E, or 05E.” |
| Code 06E, payor | “Enter the name of the payor on the line provided.” |
| Worksheet for Code 06E, line 3 | “Subtract Line 2 from Line 1.” |
| Worksheet for Code 06E, line 5 | “For each taxpayer 65 or older, enter the amount from Line 3 or Line 4 , whichever is less.” |
| Schedule E, line 4H | “Add Lines 4A through 4G.” |
| Schedule E, line 5 | “Subtract Line 4H from Line 3. Enter the result here and on Form IT-540, Line 7.” |
Annual retirement income is read from the same federal lines covered on Form 1040 line 5a and 5b and Form 1040 line 4a and 4b, and your payer reports it on a Form 1099-R (see 1099-R boxes explained).
The figures the form prints
The $12,000 figure appears in the running text of code 06E. For a single, head of household, married filing separately or qualifying surviving spouse filer: “determine the exempt amount that should be entered for code 06E by completing the FIRST COLUMN of the worksheet provided below.” For married filing jointly: “determine the exempt amount that should be entered for code 06E by completing BOTH COLUMNS of the worksheet provided below.”
Where the result goes next
The worksheet’s last line says where code 06E lands: “add the amounts on Lines 5(a) and 5(b) above and enter the result on Schedule E and code as 06E.” Schedule E then totals the exempt items with line 4H, and the final line reads “Subtract Line 4H from Line 3. Enter the result here and on Form IT-540, Line 7.”
A worked example
The worksheet prints simple arithmetic: line 3 subtracts line 2 from line 1, and line 5 takes the lesser of line 3 or the maximum on line 4. This is an illustration, not a state example, using invented amounts for a single filer age 65 or older.
Suppose line 1 shows $20,000 of retirement income reported on Form 1040, lines 4b and 5b, and line 2 shows $5,000 coded 02E to 05E. Line 3 is $20,000 minus $5,000 which is $15,000 (computed). Line 4 is the $12,000 maximum that the instructions print for the code. Line 5 is the smaller of $15,000 or $12,000 which is $12,000 (computed), the amount entered on Schedule E and coded 06E.
The amounts are invented for the computation; your own lines depend on your own 1099-R figures.
Edition and line numbers
This page reads the 2025 Louisiana Resident Individual Income Tax Return Instructions (IT-540i) for tax year 2025, the current file the Louisiana Department of Revenue served on 2026-10-19. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Counting the same benefit twice. For code 06E the instructions say “Do not include retirement benefits that are coded as 02E, 03E, 04E, or 05E.”
- Leaving the system’s name off code 05E. The instructions say “In the space provided, enter the name of the retirement system or the statutory citation exempting these benefits from Louisiana income tax.”
- Skipping the 1099-R on code 05E. The instructions say “You must attach a copy of your 1099-R(s) to your return.”
Related: Louisiana retirement taxes, whether Louisiana taxes pensions, Louisiana 401(k) and IRA withdrawals, Form 1040 line 5a and 5b, and 1099-R boxes explained.
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Answer againSources
- 2025 Louisiana Resident Individual Income Tax Return Instructions (IT-540i), Louisiana Department of Revenue: dam.ldr.la.gov
- Related official page (not quoted): Louisiana FAQ on retirement system benefits excludable from income tax, Louisiana Department of Revenue: revenue.louisiana.gov
Read from the state revenue documents linked above on October 19, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the state revenue department is the right place to confirm anything consequential.