Another phase of Republican tax relief jump-starting the state economy
Increased zero-tax bracket saves low-income workers larger share of liability
Estimated 1.5 million working North Carolinians now exempt from income tax
Raleigh, N.C. – Income tax rates for North Carolina families will fall on New Year’s Day and the state’s zero-tax bracket will also increase, reforms that save most low-income workers a larger share of their liability under Republican-led tax relief.
The state’s personal income tax rate will fall from 5.49% to 5.25% in 2019. The standard deduction, or ‘zero tax bracket,’ for families filing jointly increases from $17,500 to $20,000, and from $8,750 to $10,000 for individuals.
North Carolina’s corporate tax rate will also fall from 3% to 2.5%, the lowest rate levied in the nation, amid major economic reforms that have jumpstarted the state’s job and wage growth, consistently delivered revenue surpluses, and helped the state save a record $2 billion rainy day reserve in 2018.
After the now-tripled zero-tax bracket takes effect, an estimated 1.5 million working North Carolinians will be exempt from state income tax according to the state’s Department of Revenue. That’s nearly 30% of all income tax returns filed in the state each year.
The state’s Department of Revenue agency estimated 354,326 working adults will be removed from the income tax rolls in 2019 as a result of Republican-led tax relief this decade, a 23% increase in North Carolinians whose earnings are completely exempt from state income tax.
“Helping families save and invest their money instead of having it taxed away improves their quality of life and helps North Carolina’s overall economy,” said state House Speaker Tim Moore (R-Cleveland). “Our priority is to provide maximum tax reductions for those who need it most.”
“Long-term tax relief and revenue reform continue to produce top-tier job growth and an unemployment rate below the national average in our state, a winning combination for North Carolina families and businesses.”
The lower personal income tax rate will save North Carolinians an estimated $380 million in the 2018-19 fiscal year, another $780 million in the 2019-2020 fiscal year, and more than $810 million in the 2020-2021 fiscal year, according to the state’s Fiscal Research Division.
North Carolina’s economy added nearly 100,000 jobs in 2018 – one of the highest growth rates the state has ever had – and rural areas saw the fastest growth following previous phases of tax relief this decade.