Legislative updates and
Impact of Tax Reform 2011 - 2017
"More Money In Your Pocket"
If there is one thing you should know about the changes we’ve made to North Carolina’s tax code, it is that the vast majority of North Carolinians are keeping more of their own tax dollars. Personal income and sales taxes have been cut significantly for North Carolinians of ALL incomes.
Tax reforms enacted by the legislature cut taxes by close to $2.7 billion in FY 2015-16.
We ensured taxpayers married filing jointly pay no state personal income tax on their first $15,500 of income. And next year the personal income tax rate will drop even further to 5.499 percent. When Republicans assumed leadership in 2011, even North Carolinians in the lowest income bracket paid a 6 percent rate.
In 2017, North Carolina families and small businesses will be saving another $720 million annually on their personal income taxes. That is compared to just $166 million in sales tax base expansion.
The tax reforms we passed are working – by broadening our base and lowering our rates, we’re boosting the state’s climate for job creation, driving down unemployment and returning more money to the North Carolina families and small businesses that earned it.
North Carolina’s per capita personal income is growing faster than the national average. And even though we’ve dramatically lowered taxes, we’ve also increased North Carolina’s average per pupil spending up to pre-recession levels.
Highlights of the 2016 - 2017 Budget
Education – Increases Funding
- Increases education funding by $512 million over the enacted 2016-17 budget.
- Sets the average teacher pay above $50,000 for the first time in state history. And, when fully implemented, it would mean average teacher salaries are up almost $10,000 – more than 20 percent – under Republican leadership since the 2013-14 school year.
- Continues the commitment to lower class sizes in the early grades – a step research has repeatedly shown is key to academic success – by hiring close to 450 additional first grade teachers.
- Protects the Read to Achieve, School Connectivity, Teach for America, and Communities in Schools programs from being cut by the Department of Public Instruction.
- Fully funds teacher assistant positions at the 2014-2015 level.
- Guarantees no in-state tuition increases for a standard undergraduate college term (usually 4 years) at all North Carolina public universities, not only providing certainty to families who are budgeting for college costs and taxpayers who heavily subsidize tuition, but also additional incentive to students to complete their degrees on time. This tuition guarantee would also apply to active members of the military based in North Carolina.
- Freezes student fees – often used to fund non-academic expenses – at all North Carolina public universities at current levels and limits future increases to no more than three percent per academic year.
- Lowers tuition at select universities from the mountains to the coast to $1,000 per year for in-state students and $5,000 per year for out-of-state students, ensuring all North Carolinians have an affordable option. This would also help attract new students to universities with lower enrollment, make those schools more stable and competitive and stimulate struggling regional economies that sometimes transcend the state’s borders. The reduced tuition would apply to the following schools beginning in the Fall of 2018:
- Elizabeth City State University
- University of North Carolina at Pembroke
- Western Carolina University
Taxes – Lowers Tax Burden
- Provides major tax relief to the middle class and small businesses by making the first $17,500 a family earns exempt from income tax over the next two years. This means a family making the N.C. median household income of $44,000 annually will see an additional tax cut of $110 next year alone.
- Provides an immediate $145 million tax cut this year and an additional $205 million tax cut next year, mostly benefitting middle class families and small businesses.
Environment – Increases Funding to Protect the Environment
- Increases funding for the Clean Water Management Trust Fund by $8.6 million.
- Appropriates funds to the Board of Governors of North Carolina to oversee a continuing study and analysis of nutrient management strategies and compilation of existing water quality data for Jordan and Falls Lakes.
- As part of its rule review process, the Environmental Management Commission shall hold public hearings and convene a stakeholders working group that will provide input regarding the revisions to the nutrient strategies.
- Directs federal funds to a broadband initiative and water and sewer projects in public schools.
- Pays off an outstanding $37 million loan from the federal government that Gov. Jim Hunt borrowed in 1999 and deferred payment on for over 15 years, saving the state $45 million in interest over the next 30 years.
- Invests $12 million to implement state of the art software to ease tax filing for North Carolinians.