North Carolina Tax Reform Passes
Last week the House and the Senate both passed the North Carolina tax reform bill. (Bill 998. The Tax Simplification and Reduction Act.) Governor Pat McCrory signed it into law this week on Tuesday, July 23, 2013.
Under the new tax requirements, every North Carolina resident will be subject to a flat personal income tax rate of 5.8%. The corporate income tax rate, 6.9% right now, falls to 5% by 2015. Pending state revenues by 2017, the corporate income tax rate may drop further to 3%. The changes are being made in an effort to make the state more attractive for businesses.
One of the other amendments included with the final version of the Act includes the repeal of the North Carolina estate tax. The Act states the repeal will “become effective January 1, 2013 and applies to the estates of decedents dying on or after that date.” Most of the other tax changes become effective in January and July 2014.
When it comes to real estate investments in North Carolina, going forward there will be limitations on annual tax deductions. According to the Charlotte Observer, “Any combination of property taxes and interest expenses that exceeds $20,000 won’t be eligible for a deduction.” Residents can take advantage of allowable deductions in other ways, like charity. Unlimited itemized deductions for charitable contributions are included with the Act.
Schedule a review of your assets and investments with a tax attorney or CPA in North Carolina to find the best ways to reduce your tax burden under the new