We’re all familiar with that old saw “nothing is certain except death and taxes.” Benjamin Franklin wrote those words in a letter to French physicist Jean-Baptiste Leroy in late 1789, two years after the adoption of the United States Constitution and just six months before his death in the spring of 1790.
And while it’s taken centuries of advances in science and medicine to postpone the certainty of the former, it’s taken just a few years of Republican leadership in Raleigh to alleviate the pain of the latter — and to get the economy going here in North Carolina.
Here are some of the tax changes you’ll be seeing in the coming year:
Individual Income Tax
This year, the individual state income tax rate will be lowered to a flat rate of 5.499%, down from last year’s rate of 5.75%. This marks a stark contrast to the top tier rate of 7.75% back in 2010, the last year Democrats controlled the legislature.
Corporate Income Tax
This year, the corporate tax rate will be lowered to 3%, down from 4% in 2016 and 6.60% in 2010 under the Democrats. This new rate will be the lowest in the entire nation of any state that imposes a corporate income tax.
These tax reductions were triggered because revenue collections were more than $300 million higher than anticipated. The message here is that lower tax rates produce higher revenue collections.
Sales and Use Tax Changes
North Carolina levies a 4.75% general sales or use tax on consumers (which is below the national median of 5.95%), down from the 5.75% rate under the Democrats.
The 2016 Session of the General Assembly enacted many changes to the taxes administered by the Sales and Use Tax Division. For a detailed discussion of what will be affected, be sure to read this informative overview from the North Carolina Department of Revenue.
Happy New Year!