Income-tax cuts and changes approved since 2013 by Republicans in the N.C. General Assembly will mean an estimated 230,000 fewer people will be paying North Carolina income taxes in 2019, according to a legislative fiscal analysis memo released Tuesday.
House Speaker Tim Moore’s office released the memo, which it requested from the legislature’s nonpartisan Fiscal Research Division after this year’s budget included another round of tax cuts.
Starting in 2019, the state’s personal income tax rate will drop from 5.499 percent to 5.25 percent. The budget will also 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.
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Democrats have opposed the cuts, saying they will benefit the wealthy and will make it harder for the state to fund key services.
The fiscal analysis compares the number of people who will owe income taxes in 2019 under current tax law to the number under the state’s 2012 tax policy. Previous estimates found that 95,000 people who owe income taxes this year won’t owe any in 2019 once the new standard deduction takes effect.
“Of the nearly 4 million tax returns anticipated for tax year 2019, we estimate the number of returns will decrease an estimated 230,000 when compared with the expected number if the 2012 tax laws were still in effect,” fiscal analysts Barry Boardman and Brian Slivka wrote in the memo. “The increase in these no-tax-liability returns will be due primarily to the increase in the standard deduction from $17,500 in 2018 to $20,000 in 2019.”
Moore touted the statistic in a news release Tuesday. “Hundreds of thousands of hard-working North Carolina parents and young people, long-time residents and newcomers will get a break from owing any income tax because we put average people first with relief that works for the workforce and helps low-income families keep more of their earnings,” he said.