SB 583, the Lead. Invest. Families/Foster Teen Act (LIFT), creates a program providing $1,000 monthly cash payments to four specific groups: homeless high school seniors (grade 12), expectant or new mothers with children under 18 months, natural disaster survivors qualifying for FEMA aid, and young adults exiting foster care (aged 16-27). Payments begin April 1, 2026, and continue until April 1, 2035, with disaster survivors receiving payments for 12 months post-disaster. The program is funded through a new LIFT Fund established within the Department of Health and Human Services, which receives state appropriations and other designated funds, and payments are exempt from state income tax and do not affect eligibility for other public benefits. The bill also modifies the corporate income tax rate to offset program costs, aligning the effective tax rate for corporations more closely with individual taxpayers.
HB 131 reinstates a 35% tax credit for businesses and homeowners who install solar energy systems in North Carolina. Businesses can claim the credit over five years (with a $2.5 million maximum per installation), while homeowners receive capped credits based on system type (e.g., $1,400 for water heating, $3,500 for space heating). The credit applies to equipment placed in service in the state and expires for new installations after 2017, though projects meeting 2015 construction milestones qualify for extension. This bill renews a previously expired tax incentive program for solar energy adoption.
HB 303, titled "Make Corporations Pay What They Owe," would repeal a planned phaseout of North Carolina's corporate income tax. Specifically, it reverses Section 42.2 of S.L. 2021-180, which had scheduled a gradual reduction in the corporate tax rate. This bill directly affects corporations subject to North Carolina's corporate income tax by preventing the tax rate from decreasing as previously scheduled. The legislation is procedural in nature, focusing on reversing a specific tax policy change rather than creating new tax rates or mechanisms.
HB 11 would allow North Carolina taxpayers to deduct overtime pay, up to $2,500 in bonus pay (defined as cash awards for workplace dedication), and reported tips from their taxable income. It applies to individuals and married couples filing jointly, with each spouse eligible for separate deductions. The bill specifically defines "bonus pay" to exclude tips and requires taxpayers to provide documentation to claim the deduction. This policy change would take effect for tax returns filed in 2025.
SB 303 repeals North Carolina's service tax, which previously applied to certain services like repairs, maintenance, installation, and service contracts. This directly affects retailers and service providers who collected this tax on qualifying transactions. The bill removes specific tax code provisions (including those governing real property services and bundled transactions) and makes necessary adjustments to other related tax laws. The repeal would eliminate the tax obligation for businesses and customers involved in these service transactions.
HB 459 modifies North Carolina's income tax rate reduction trigger to lower the revenue threshold that could lead to future tax cuts. It adjusts the required General Fund revenue levels (e.g., $34.76 billion for FY 2027-2028) that would trigger a tax rate decrease below 4.25% starting in 2029. This change affects all individual taxpayers in North Carolina by making it easier for tax rates to decrease if state revenue meets the new lower thresholds. The bill does not change current tax rates but alters the conditions under which future reductions might occur. The modification follows the state's recovery needs after major hurricanes, though the summary focuses solely on the policy mechanism.
SB 354 reenacts North Carolina’s Research and Development (R&D) tax credit with updated eligibility rules, primarily affecting small businesses conducting qualified research in the state. To qualify, businesses must meet specific wage standards (e.g., paying at least 90% of county average wages in certain areas), provide health insurance covering 50% of premiums for full-time employees, maintain environmental and safety compliance, and have no overdue tax debts. The credit applies to expenses for research performed in North Carolina, including costs paid to state universities for research. This bill modifies existing rules to tighten eligibility while maintaining the credit for qualifying small businesses through 2040.
SB 351, the Right to Start Act, allows new businesses (corporations, S corporations, LLCs, partnerships, and other entities) less than five years old with under $5,000 in net income to defer their state income tax payment for one year. It also requires state agencies to prioritize contracting with businesses operating under five years and mandates the Department of Administration to collect and report annual data on these contracts, including demographic and geographic breakdowns. The bill directly affects small, newly formed businesses seeking tax relief and state procurement decisions. Key provisions include the tax deferral eligibility criteria and the data collection/reporting requirements for state contracts.
SB 521 creates a 35% nonrefundable income tax credit for investment entities (like partnerships or S-corps) that fund small, newly formed businesses focused on community infrastructure and resilience. Eligible businesses must be under five years old, employ 25 or fewer people in North Carolina, generate $2 million or less in annual revenue, and primarily work on projects like improving roads, utilities, disaster preparedness, or sustainable energy. The credit limits total annual state spending to $5 million and caps individual credits at $100,000 per year, with unused credits carryable for up to 10 years. This policy aims to incentivize private investment in community-focused small businesses through tax benefits, not direct government funding.
SB 455, the Main Street Resilience Act, provides North Carolina small businesses with a new income tax deduction starting in 2026. It allows eligible small businesses to deduct up to $75,000 of their net business income from taxable income each year, with married couples filing jointly able to deduct up to $150,000 total. To qualify, a business must have fewer than 50 total employees (including related entities) and annual revenue under $5 million, excluding passive income. This deduction directly reduces tax liability for qualifying small businesses operating in North Carolina.
