Governor Pat McCrory signed The North Carolina Tax Simplification and Reduction Act (HB998) into law last week. In case you were not paying attention, this is the first comprehensive change in our tax code since the 1930’s. Many of the changes will take place starting in January while others will be phased in over the coming years.
Here’s what we think we can summarize:
Individual income tax rates will change effective January 2014
– to a flat tax of 5.8%, then dropping to 5.75% in 2015
– the law eliminates personal exemptions
– Itemized deductions will be eliminated except charitable deductions and deductions for mortgage and property taxes are capped at a total of $20,000- OUCH!
– the law maintains exemptions for social security income
– the law increases std. deductions for married taxpayers to $15K, head of households to $12K, and single taxpayers to 7.5K
– the law eliminates the NC Estate Tax
Corporate tax rates in NC drop to 6% next year, 5% in 2015, and 4% in 2016 and 3% in 2017 if certain state revenue goals are met.
The sales tax base has been expanded and some tax holidays that effected real estate (Energy Star* appliance holiday) have been repealed.
These changes will touch each of us! And heads up the US Congress is looking to make changes too.