2017 North Carolina Tax Law Changes

Changes to tax rates in North Carolina became effective on January 1, 2017. The adjustments affect both businesses and individuals. When revising tax planning efforts, consider the modifications below in addition to pending federal tax changes that might affect family businesses, forthcoming adjustments from the Trump Administration, and life changes that could influence income:

• The corporate tax rate reduced from 4 percent to 3 percent. North Carolina offers one of the lowest tax environs for corporations in the nation. The opposite was true prior to 2013 when the corporate tax rate was 6.75 percent. As of this writing, The Tax Foundation ranks North Carolina as #16 nationally for the best business tax climate.
• The income tax rate reduced from 5.75 percent to 5.5 percent. As above, the changes are a growing shift away from the tax requirements pre-2013 when the top personal income tax rate in North Carolina was 7.75 percent.
• The standard deduction for singles and married couples filing separately increased from $8,250 to $8,750, while the deduction for married couples filing jointly increased from $16,500 to $17,500, and head of household increased from $13,200 to $14,000.