Small Business Capital Improvement Account.

SB 627 allows North Carolina small businesses with annual gross receipts under $10 million to reduce their state income tax by deducting funds deposited into a special capital improvement account. Businesses can deduct up to 5% of their adjusted gross income (capped at $1 million), 2% (up to $2 million), or 1% (up to $3 million) for qualifying property improvements like upgrades that add value, extend property life by 10+ years, or adapt property for new business uses. Funds must be deposited into a federally insured bank account and used solely for these improvements; unused funds must be added back to taxable income. The bill takes effect for tax years beginning January 1, 2025, and directly affects small businesses making eligible capital investments.