Raleigh, N.C. – Leaders of the North Carolina House Finance Committee filed House Bill 356, the Tax Reduction Act of 2017 this week, proposing another package of tax cuts for families and businesses across the state. The legislation builds on historic tax relief and reforms in North Carolina that have stimulated the state’s rapid economic growth since 2013.
House Finance Committee Chairs Bill Brawley, Susan Martin, Jason Saine and John Szoka co-sponsored the tax cut package that would leave more money in the pockets of North Carolinians and let businesses reinvest their earnings in creating jobs and economic growth.
House Bill 356 would raise North Carolina’s standard deduction from $17,500 to $18,500 for married couples filing jointly and from $8,750 to $9,250 for single filers, tripling the state’s zero tax bracket since 2011.
The zero-tax bracket under Democrat control was a meager $6,000 for married couples and $3,000 for single filers.
“The House tax plan for 2017 continues the good work that has been done over the last few years,” said lead-sponsor and House Finance Chairman John Szoka. “Because of responsible budgeting and spending, and job growth spurred by solid economic policies, North Carolina is projected to have a budget surplus of over a half billion dollars.
“The House’s tax plan incentivizes good paying manufacturing jobs and continues to lower personal income taxes, setting the stage for increased economic growth.”
The income tax relief in House Bill 356 is expected to save taxpayers $64.5 million in the 2017-18 fiscal year and $124 million in the 2018-19 fiscal year.
House Bill 356 also allows North Carolina companies to invest more in their workforce and equipment by tax exempting major manufacturing machinery, helping the state attract large employers and compete with regional neighbors who offer job creators the same tax relief. The tax reform is expected to save North Carolina businesses $50.8 million per year.
“We are building a tax code that benefits everyone in North Carolina,” said House Finance Chairman Jason Saine. “The Tax Reduction Act of 2017 will continue to lower personal income taxes for the middle class, lower taxes on large and small businesses alike located in North Carolina, and attract manufacturing jobs.
“In total – we are building an economic climate that works for all our citizens.”
Finally, House Bill 356 continues North Carolina’s commitment to tax relief and reform by simplifying the franchise tax, letting companies with extensive operations in North Carolina reinvest more money, and providing $85 million in tax relief per year.
“During my time serving North Carolinians, I have heard time and again that we need to be the most competitive state for manufacturing,” said House Finance Chairwoman Susan Martin. “Advanced manufacturing provides high-paying jobs that often locate in rural communities with a greater economic multiplier effect than most.”
“In 2015, we made major changes to our tax laws to attract manufacturing jobs to our state, and it’s time to do more and make North Carolina a national leader in high-tech jobs. North Carolina remains one of only a few states to levy a tax on manufacturing machinery. We are proposing to remove a major impediment to our state’s economic growth, so job creating manufacturers in North Carolina can grow and invest tax savings in employment and wages.”
“We’ve helped turn our state into one of the best for business in just a few short years,” said House Finance Chairman Bill Brawley. “Now, every company, large and small, will calculate what they owe the state of North Carolina under the same system. This bill simplifies the franchise tax and offers economic relief; incentivizing companies to invest their money and workforce here in North Carolina to not only remain, but to continue creating jobs in our state.
Background:
North Carolina Republicans have cut taxes for families and businesses by over $4.5 billion this decade, and the state reported a $552 million budget surplus in February 2017.
In 2011, General Assembly leaders resisted demands from then-Governor Perdue to permanently install a $1 billion annual sales tax increase. State taxpayers enjoy a lower and consistent 4.75 percent sales tax rate on all their purchases under Republican leadership, in addition to significant income tax reductions.
Despite being handed a $3 billion budget gap for the 2011-12 fiscal year, North Carolina General Assembly budget writers also provided nearly half a billion dollars in small business tax relief.
North Carolina’s estate tax – also known as the “Death Tax” – was repealed January 1, 2013.
Beginning in January 2014, the individual income tax fell from a top rate of 7.75 percent to a simplified, single 5.8 percent rate. Along with lowering rates, a larger standard deduction of $7,500 of income for singles and $15,000 for married filers was created.
In 2015 the North Carolina General Assembly cut personal income taxes for the second time in three years. Starting in 2017 North Carolina’s personal income tax rate dropped from 5.75 percent to 5.499 percent and the standard deduction increased by $500.
North Carolina’s corporate tax rate – formerly highest in the southeast at 6.9 percent – was reduced to 6 percent in 2014, 5 percent in 2015, 4 percent in 2016 and 3 percent in 2017. Among states that have a corporate tax, North Carolina now has the lowest in United States.