Starting in 2019, thousands of North Carolinians will see lower state income tax bills.
The standard deduction level will rise for both single and married filers, and the income tax rate will drop. The rate change will help wealthier people more, and the deduction changes will help low- and middle-income people more.
The tax plan, part of the new state budget that the legislature passed over a veto from Gov. Roy Cooper, would reduce the personal income tax rate from 5.499 percent to 5.25 percent. It would raise the standard deduction – the amount on which people pay no income taxes unless they itemize – to $20,000 for married couples filing jointly from $17,500.
It would also lower the corporate income tax rate to 2.5 percent from 3 percent.
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Here are some of the other ideas affecting taxes that the N.C. General Assembly considered during more than five months in Raleigh, and where those ideas stood by the time state lawmakers adjourned early Friday morning. For even more, read our roundups of what happened on education, the environment, public safety, employee pay and benefits, elections, conflicts between the branches of government and some of the other notable issues of session.
The General Assembly has made several changes to the state tax code since Republicans took control in 2011.
One change that failed this year was a push to change the state constitution to ban any future efforts to raise the income tax rate. A bill to let voters decide on putting that in the constitution passed the Senate but died in committee in the House.
The General Assembly also denied several ideas for tax reform from Democrats in the minority, like bringing back tax credits for child care expenses.
A House proposal would let cities and towns have their own sales taxes to raise money for infrastructure and economic development projects. The bill passed one committee and is parked in another committee, but it could surface again next year.
An effort to tweak how sales tax revenues are distributed – a boost to rural counties at the expense of a few urban counties – passed the Senate but never got a hearing in the House.