TAX Reform Is Here – House Bill 998

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

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

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Published by Angie Hedgepeth

Angie Hedgepeth, Government Affairs Director for the Association, attends all the local meetings each month, as well as NAR and NCAR meetings, and keeps members abreast of the multiple issues being addressed in local, state and national government. She prepares reports on the meetings she attends and they are included in the weekly "Government Affairs Update".