On January 1 2014, North Carolina residents welcomed a new year along with new tax rates. A comprehensive tax reform bill was signed into law in July 2013 and transformed North Carolina’s bracket income tax rate, formerly one of the highest rates in the Southeastern United States, into a flat 5.8% tax for all taxpayers in 2014.
The reform also increased the standard deduction for North Carolinians to the first $15,000 of income for those married filing jointly, the first $12,000 of income for heads of household and the first $7,500 of income for those filing single. It also made charitable contributions fully deductible while offering a $20,000 combined maximum deduction for mortgage interest and property taxes.
Furthermore, tax rates for corporations were reduced from 6.9% to 6%. If the certain revenue goals are met, that rate will drop even further in 2015 and 2016. Many believe this is an effort to attract more businesses to the state.
But, while it may seem like this is nothing but good news, to compensate for the lower tax rates for income and corporations, sales taxes will be increased for things like electricity, movies, and other services.
The reform also sees the abolishment for back to school sales tax holidays.
If you’re a tax payer in North Carolina and have questions about the new tax laws don’t be afraid to contact a tax attorney who can answer your questions.