North Carolina Senate leaders filed legislation Thursday that continues to reform and simplify the state’s tax code and provides $1 billion in tax relief to North Carolina families and small businesses. It is the latest step in the Senate’s long-term commitment to phasing out North Carolina’s personal and corporate income taxes.
The Job Creation and Tax Relief Act of 2015, sponsored by Senate Finance Committee Chairmen Bob Rucho (R-Mecklenburg), Bill Rabon (R-Brunswick) and Jerry Tillman (R-Randolph), would:
- Create a progressive zero percent tax bracket to ensure all North Carolina taxpayers, regardless of income, have the option to pay no state personal income tax on their:
o First $17,500 of income in 2016 and first $20,000 of income in 2017 for those married filing jointly
o First $8,750 of income in 2016 and first $10,000 of income in 2017 for single filers
OR they could opt to claim itemized deductions available under current law, including those for mortgage interest, property tax and charitable contributions.
- Further reduce the state personal income tax rate – which applies to families and thousands of small businesses – to 5.625 percent in 2016 and 5.5 percent in 2017. Just two years ago, the state’s top personal income tax rate was 7.75 percent.
“This bill not only continues to create a fair, simple tax system, it also delivers a billion dollars in tax relief to North Carolina’s job-creating small businesses and families of all incomes,” said Rucho, Rabon and Tillman. “Putting more money back into the pockets of the people and small businesses who rightfully earned it will continue to drive economic growth in our state.”
In addition, the bill further lowers the corporate income tax rate to 4.5 percent in 2016 and 4 percent in 2017, moves to a single sales factor and reduces business franchise taxes.