A bill under review in the Louisiana legislature proposes a tax credit for policyholders paying high automobile insurance premiums. The measure forms part of a broader legislative effort to address rising coverage expenses in the state.
House Bill 331 introduces a tax credit for premium amounts exceeding $2,500 per vehicle, limited to two vehicles per tax year. The maximum credit is $5,000 per vehicle.
The total credit cannot exceed the taxes owed for that year. If a policyholder’s eligible credit surpasses their tax liability, the unused portion may be carried forward for up to five years.
The bill states that, if passed, the law would take effect on January 1, 2026, and the tax credit would expire on December 31, 2031.
Although Louisiana may become the first state to offer a tax credit tied to auto insurance premiums, other states have implemented tax credits to address insurance expenses.
Mark Friedlander, media relations director at the Insurance Information Institute, noted that Florida passed legislation last year removing taxes and fees on home and flood insurance premiums for one fiscal year.
The change led to an estimated average savings of $140 per household, based on the elimination of a 1.75% premium tax, a 1% Florida Insurance Guaranty Association fee, and a 1.1% state fire marshal fee.
For policyholders with flood insurance, the additional average savings was approximately $16, according to the same analysis.
A similar federal proposal surfaced in the U.S. House of Representatives, which would have allowed homeowners to deduct up to $10,000 in home insurance premiums from federal taxes. That bill, introduced by Florida Sen. Rick Scott in 2024, did not pass committee review.
Louisiana lawmakers are reviewing how state law limits transparency in personal injury jury trials as residents continue to face some of the highest auto insurance premiums in the U.S.
Five legislative committees with authority over insurance and legal issues met to examine the causes of rising premiums and explore possible solutions. Lawmakers expect to hold a special session next year focused on insurance.
Auto insurance costs in Louisiana remain among the highest in the U.S. One recent study ranked the state as the eighth most expensive for vehicle coverage, according to US Auto Insurance Rates by States in 2025.
Commissioner of Insurance Tim Temple told the House Insurance Committee that Louisiana records twice the national average of auto claims involving bodily injury. Lawmakers are now examining why that number is so high and how much it affects premium levels.
Temple pointed to recent actions in Florida, where lawmakers passed insurance laws with support from the industry. These laws reduced policyholder options and limited litigation.
Louisiana legislators are looking at similar options. Insurers have long argued that state laws encourage lawsuits, inflating both claims and payouts, which they say leads to higher premiums.
However, insurance companies often avoid disclosing the full details behind their pricing models. Lawmakers have had to rely on input from lobbyists and legal professionals instead.
