N.C. residents in for big tax cuts if budget passes
Assuming a legislative override of Gov. Roy Cooper’s budget veto — which happened as The Smoky Mountain News went to press June 27 — North Carolinians could be in for a slew of tax cuts that will save state residents by one estimate more than $530 million over two years when they take effect in 2019.
The current budget — approved by both the State Senate and House — was awaiting the signature of the governor, who refused to provide it largely because of what he thinks are tax cuts that reward the rich and shortchange the poor.
But the likelihood of the budget’s enactment in its current form is high, and several of the proposed tax cuts will probably soon become law:
• A reduction in the personal income tax rate to 5.25 percent from the current 5.499 percent. The median income in Haywood County in 2015 was $42,257 and those earning at that level will see an extra $105 in their paychecks each year. The 5.499 percent rate was down from 5.75 percent previously.
• An increase in the standard deduction to $20,000 from the existing $17,500 for couples filing jointly and to $10,000 from $8,750 for single filers. The proposal will save married couples $137 a year, and single about filers half that.
• Changing the state’s child tax credit by making it a standard deduction that fluctuates based on income. Those with incomes over $120,000 will see no deduction; higher earners below $120,000 will receive $500, and the lowest earners will see up to $2,500.
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• Reducing the corporate tax rate from 3 percent to 2.5 percent. N.C.’s rate is already the lowest in the country among states that have such a tax, and is down from 6.9 percent in 2013 and then 5 and 4 percent in 2015.
• Scrapping and replacing the state’s business franchise tax with a more streamlined version that levies a flat tax of $200 on a company’s first $1 million of income. The current rate is $1.50 per $1,000 of company valuation.
