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HB 184

TAX/INCOME-INDIV/EXEMPT: Authorizes an individual income tax deduction for certain amounts a taxpayer receives through hardship distributions from retirement accounts (EN DECREASE GF RV See Note)

2025 Regular Session Introduced by Roy Adams and 32 co-sponsors

Louisiana allows taxpayers to deduct hardship retirement account withdrawals from state income, reducing tax liability starting January 2026 while decreasing state revenue.

Signed by the Governor. Becomes Act No. 251.
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WeVote Research Nonpartisan
Bill Summary · HB 184

Legislative bill overview

HB 184 allows Louisiana residents to deduct certain hardship distributions they withdraw from retirement accounts (like 401(k)s and IRAs) from their state income taxes. The deduction applies to withdrawals taken due to financial hardship, reducing the taxable income reported to Louisiana on those distributions. The bill became law effective January 1, 2026.

Why is this important

Hardship distributions typically trigger immediate income taxes and early withdrawal penalties, creating a significant financial burden for people facing emergencies. This deduction provides tax relief at the state level for individuals already paying federal taxes on these withdrawals, potentially saving hundreds to thousands of dollars for those accessing retirement savings during crises. However, the state revenue impact note indicates this will decrease general fund revenue, meaning Louisiana foregoes tax income.

Potential points of contention

  • Fiscal impact: The bill reduces state tax revenue (noted as "GF RV" decrease), raising questions about whether this cost is justified or sustainable during budget constraints
  • Scope limitations: The bill's language specifies "certain amounts"—the exact definition and qualifying hardship circumstances aren't detailed in this summary, creating uncertainty about who qualifies
  • Equity concerns: Higher-income earners with larger retirement accounts receive larger absolute tax savings, potentially benefiting wealthier taxpayers disproportionately compared to lower-income workers with modest retirement savings

Compiled from official sources — confirm details with the bill’s official record.

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