TAX Reform Is Here – House Bill 998

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Governor McCrory has signed HB 998.  This NEW tax legislation will have a dramatic impact on the citizens and business climate of North Carolina.  Below is a one page snapshot of the new changes.

To read the bill in its entirety please go to www.ncleg.net

Personal Income Tax:

Currently – 3 tiered rates of 6%, 7% and 7/75%
Now – flat rate of 5.8% in 2014, 5.75% in 2015

Increased standard deduction for all taxpayers
First 15,000 income – married filing jointly
First 12,000 income – heads of households
First 7,500 income – single filers

Personal exemptions and deductions – eliminated
Deductions for charitable contributions – unlimited
Child credit remains intact and increases slightly for families of $40,000 and less
Social Security will not be taxed by the state
Mortgage interest and property tax deductions – capped at $20,000 for all filers

Corporate Income Tax:

Currently – 6.9%
Now – 6% in 2014, 5% in 2015, 4% in 2016, 3% in 2017 – if the state meets goals
Now – $50,000 deduction on small business related income is eliminated

Sales Tax:

Sales tax holiday weekend (back to school tax free weekend) is eliminated in 2014
Energy Star appliance sales tax holiday is eliminated in 2014

Other Taxes:

State estate tax(death tax) is eliminated
Gas tax is capped @ 37.5 cent per gallon
No changes to the franchise tax…yet