A bill currently under consideration in the Louisiana legislature seeks to provide policyholders with a tax credit to offset rising automobile insurance premiums, according to a report from Best Wire.
House Bill 331 would offer a tax credit for premiums paid in excess of $2,500 per vehicle, with a cap of $5,000 per vehicle. Policyholders would be eligible for the credit for up to two vehicles per taxable year and credits could not exceed the total amount of taxes owed. If the credit exceeds taxes owed, the excess could be carried forward for up to five years.
The proposed tax credit is set to take effect on January 1, 2026, and will expire on December 31, 2031, if enacted. Louisiana could be the first state to offer a tax credit specifically for auto insurance premiums, the report said.
However, other states have already used tax credits in efforts to ease insurance-related costs. Florida, for example, passed a law in 2024 eliminating taxes and fees on home and flood insurance premiums for one fiscal year. This measure led to average savings of about $140 for homeowners, according to the Insurance Information Institute.
Additionally, the US House of Representatives saw a proposal earlier this year that would have allowed homeowners to deduct up to $10,000 of their home insurance premiums from federal taxes, though the legislation introduced by Florida Republican Sen. Rick Scott, did not make it out of committee, the report said.
Louisiana's push for the tax credit comes as residents have faced significant increases in auto insurance rates. A report from the Louisiana Department of Insurance noted that between 2019 and 2023, average rates for personal auto insurance increased by more than 25%. The high rates have prompted lawmakers to seek ways to help ease the financial burden on residents.
State Rep. Edmond Jordan, a Democrat from District 29, is the sponsor of House Bill 331. Jordan has not yet commented publicly on the bill, but it is expected to be debated in the coming weeks.
Meanwhile, proponents of the bill argue that it will provide immediate relief to Louisiana drivers, particularly those with multiple vehicles, and encourage greater competition in the insurance market.
The proposed tax credit provision in House Bill 331 is part of a broader effort by Louisiana lawmakers to address the rising costs of automobile insurance and other insurance products in the state. The success of the bill could set a precedent for other states looking for ways to address the affordability of insurance for their residents, according to the report.
