RALEIGH, NC (WECT) – Governor Pat McCrory signed HB998 into law on Tuesday, fulfilling one of the promises made during his campaign. The Tax Simplification and Reduction Act was negotiated by leaders of the state House and Senate less than two weeks ago.
"I came to the governor's office a few short months ago with a sense of urgency and resolve to put North Carolinians back to work," said Governor McCrory during the signing ceremony, which was attended by leaders of the House and Senate, along with members of his administration. "I firmly believe that this reform package will prove to be critically important to growing North Carolina's economy and getting people back to work. This tax reform package puts more money in families' budgets and will restore confidence for North Carolina businesses. Because of this package, job creators will think about relocating to our great state."
Here are the highlights of the tax reform bill, according to a release sent by the Governor's Office:
Personal Income Tax:
-Reduces and simplifies the 3-tiered state personal income tax from the current maximum rate of 7.75% and minimum rate of 6% to 5.8% in 2014 and 5.75% in 2015.
-Increases the standard deduction for all taxpayers, applied to the:
-First $15,000 of income for those married filing jointly
-First $12,000 of income for heads of household
-First $7,500 of income for single filers;
-Retains the state child tax credit and increases it for families making less than $40,000;
-Offers a $20,000 combined maximum deduction for mortgage interest and property taxes;
-Makes charitable contributions fully deductible;
-Protects all Social Security income from state taxes.
Corporate Income Tax:
-Reduces the corporate income tax from 6.9% to 6% in 2014 and then to 5% in 2015 a 29% rate reduction.
-If the state meets revenue targets (i.e. if there is additional tax revenue growth due to a growing economy), the corporate income tax will drop to 4% in 2016 and 3% in 2017.
-Caps the state gas tax;
-Eliminates North Carolina's death tax;
-Preserves the sales tax refund for nonprofits.
"For decades, North Carolinians have languished under an archaic tax system that punished success and ignored the needs of a modern society," said House Speaker Thom Tillis. "Through those years, many have tried and failed to bring true reform to the system in a way that benefits every taxpayer. Today, we are accomplishing what others could not by signing into law a historic measure that will bring tax relief to our citizens and make our state more competitive for economic development and job creation. This is a great day for North Carolina."
Senate President Pro Tempore Phil Berger also attended the signing ceremony. "By enacting comprehensive tax reform, we have fulfilled our most important promise to the voters while making North Carolina a positive model for the rest of the nation," Berger said. "The Senate is proud to have worked alongside Gov. McCrory and the House of Representatives on a plan that makes our state competitive for 21st century jobs and returns more money to working families."
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