The North Carolina Senate had announced plans to reveal the new NC tax reform bill in early May. However, the press conference instead produced the outline of a measure that the Senate hopes to turn into a bill later in 2013. Citing pending reports of tax collections from April as part of the bill’s delay, the legislators provided the proposed tax changes that will combine to about $1 billion in tax cuts.
Proposed North Carolina tax changes:
- Income tax. The highest income tax would be reduced to 4.5% (over 3 years) and low-income earners would not have any tax liability (effective immediately).
- Estate tax. The North Carolina estate tax would be eliminated. House Bill 101 was approved the same day as the press conference, which wouldrepeal North Carolina’s estate tax effective immediately.
- Corporate tax. Corporate tax would be reduced to 6%.
- Business franchise tax. Would be reduced by 10%.
- Sales tax. Taxable items would expand to include services; prescription drugs will also be taxable. The sales tax rate would be reduced to 6.5%. Non-profits would no longer be exempt from sales tax.
- Real estate tax. No tax changes would occur, but the areas in which these taxes are spent will be amended.
Although these changes are still evolving, all individuals, non-profits, and businesses would be affected by North Carolina’s tax reform in 2013 if the above changes pass. Take time now to discuss financial planning moves with your North Carolina tax attorney and create a strategy to help reduce your tax liabilities.