Provides for an optional exemption of business inventory from ad valorem taxes and to authorize the reduction of the fair market value percentage of business inventory under certain circumstances (EN SEE FISC NOTE GF EX See Note)
HB365 creates a new optional framework for Louisiana parishes to exempt business inventory from ad valorem property taxes, either immediately, over a phase-in period of up to five years, or by partially exempting inventory through a reduction in the percentage of fair market value used for taxation. The bill defines business inventory as tangible personal property held for sale, in production for sale, or used to make goods, and it requires any exemption or partial exemption to be agreed to in writing by the parish sheriff, school board, and parish governing authority.
The bill also establishes a state payment mechanism for parishes that choose a full exemption before July 1, 2027. Eligible parishes may receive one-time payments from the Revenue Stabilization Trust Fund, with payment amounts tied to 2026 inventory tax collections and capped at specified maximums. Parishes that adopt the exemption after that date, or that only partially exempt inventory, are not eligible for those payments. The act applies to property tax years beginning on or after 2026 and is contingent on the adoption of a related constitutional amendment in House Bill 366.
HB365 amends Louisiana law by enacting R.S. 47:1703.2 and 1703.3 to authorize parish-level business inventory tax exemptions and partial exemptions, while also setting administrative procedures for written elections, reporting to the Louisiana Tax Commission, and distribution of any state replacement payments to local taxing authorities. It further provides that exempted or partially exempted inventory will not be treated as taxable property for future reappraisals or millage adjustments, and that any resulting revenue loss must be absorbed by the taxing authority rather than shifted to other taxpayers. The bill affects parish governments, sheriffs, school boards, tax collectors, assessors, and businesses holding inventory subject to ad valorem tax.
The voting record shows strong bipartisan support and no recorded opposition: the bill passed the House and Senate unanimously at each recorded stage, including final passage, rejection of Senate amendments, and adoption of the conference report. The absence of committee transcript material limits insight into debate, but the unanimous votes suggest broad agreement on the policy direction and the accompanying fiscal safeguards.
The main policy tension in the bill is between providing tax relief to businesses with inventory and protecting local government revenue, especially for parishes, school boards, and other taxing authorities that rely on ad valorem collections. The bill addresses that concern by limiting state replacement payments to early adopters, capping those payments, and requiring local taxing authorities to absorb revenue losses without triggering higher taxes on other property owners through reappraisal or millage adjustments. Another point of potential contention is that the exemption is optional and depends on coordinated action by multiple local officials, which may create uneven adoption across parishes and differing local fiscal impacts.